Nearly 60 per cent of the 500 small businesses surveyed by the BBRS have accessed the government-guaranteed loan schemes.
The Bounce Back Loans offer struggling small businesses up to £50,000 interest free for the first 12 months, with a low 2.5 per cent interest rate after that.
>See also: Microbusiness £50,000 Bounce Back Loans – how they work
Over £14bn has been lent so far through Bounce Back Loans.
The BBRS survey raises the prospect of thousands of firms having to be pursued through the courts for what they owe – with many more going bust despite the Treasury’s generosity.
A total of 27 per cent of respondents to the BBRS survey said they do not believe they will be chased for the debt, and 16 per cent warned they will not be financially strong enough to repay it in any case.
Lewis Shand Smith, chairman of the BBRS, said: “Government-backed loan schemes have provided a lifeline. But it is critical for customers to understand that, just like any other loan, they will be required to repay 100 per cent of the money they borrow under these new schemes. There needs to be clarity about that now to avoid the risk of storing up problems for the future.”
Mike Cherry, national chairman of the Federation of Small Businesses, has suggested that the 100-per-cent government-backed loans should be treated as student loans, repayable over a much longer period when borrowers cannot afford to repay – or waived entirely under exceptional circumstance.
Roger Barker, head of corporate governance at the Institute of Directors, told the Telegraph that government loans could be turned into a new kind of debt, to be repaid according to financial performance. This would prevent struggling small businesses from going under once the interest-free period expires and repayments start to bite.