Originally written by Timothy Adler on Small Business
The Government should convert the projected £35bn of bad debt from small business owners who have taken out Covid loans into tax owing.
Converting the bad debt into tax that could be repaid over years to HMRC would free up cash better spent on investment and saving 3m jobs.
So say over 250 financial experts led by Aviva chairman Sir Adrian Montague in the long-awaited report from TheCityUK.
TheCityUK Recapitalisation Group calls for the Government to back a “UK Recovery Corporation”, which would manage £35bn of unsustainable debt already Government guaranteed.
>See also: Government should triple equity to invest in businesses to £30bn
Over time, private investors could invest in the UK Recovery Corporation, encouraging the public to back SMEs in Britain, something chancellor Rishi Sunak is keen on.
Depending on how much money they owe, small businesses could either go into a “Business Repayment Plan” to convert unmanageable loans into means-test tax liabilities, or, for larger debts, use “Business Recovery Capital” to convert COVID-19 crisis loans into preference shares or long-term subordinated debt.
Both solutions mean small businesses will not have to give up any equity in their businesses.
>See also: Bim Afolami calls for £15bn Recovery Fund for scale-ups
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