New research has revealed the construction industry could cost the Treasury £4.2bn in business and self-employed defaults.
Insolvency specialists, Business Rescue Expert, has delved into industry sectors to reveal how small businesses in each sector have embraced the Bounce Back Loan Scheme (BBLS) in terms of how much has been borrowed, by whom and what the recipients have done with the funds. Its recent study found that the BBLS could cost the treasury £27bn that would ultimately not be repaid, with the losses potentially equal to the cost of building up to 23 Wembley Stadiums. But how does this look for the construction sector?
Builders, fitters and other construction industry businesses are the second highest borrowing sector after the retail sector, obtaining a collective £7bn through the BBLS. The construction sector also saw the most individual loans taken out with over 238,000 bounce back loans being supplied to the various businesses.
Chris Horner, Insolvency Director with Business Rescue Expert, said: “The figures illustrate not only the size of the support measures that were available to businesses to borrow during the pandemic lockdown but also the potential cost if they can’t be repaid.
“In the first quarter of this year alone, over 42% of the liquidation cases we’ve handled had taken out a BBLS and the average amount borrowed averaged £37,500 per company.
“As the first loan payments for the BBLS come due, businesses will have to seriously look at their ability to pay and their calculations might have been affected by not being able to reopen earlier than this month at best.
“Businesses that have topped-up their initial BBLS loan will also find out that not only are they unable to defer these payments, but they’ll come out at the same time as their original loan repayments – an unwelcome and expensive surprise.
“The most important thing we can is to remind business owners and directors that there are options available for them. If they get professional advice and quickly then they could yet find a way out of a seemingly impossibly tight situation. Ignoring it is only guaranteed to add to their problems.”