As much as £5bn of state-backed government Covid-19 emergency loans are at risk of not being repaid, according to estimates by officials and bankers, who said the initial data suggested that defaults would be much lower than initially feared.
The assessment is based on the first few months of debt servicing, which shows that so far between 5 per cent and 10 per cent of small and medium-sized (SME) businesses that tapped the government’s £47.4bn “bounce back” coronavirus support scheme have missed repayments.
Bankers said the stronger than expected economic recovery from the pandemic had helped companies regain their financial independence. One banking executive said that up to 5 per cent of all loans had already been repaid in full on the date that the 12-month interest-free payment period ended.
