Originally written by Anna Jordan on Small Business
Industry leaders suggest giving struggling companies the option to convert emergency Bounce Back Loans into employee equity stakes to aid businesses recovery.
The Federation of Small Business (FSB) and Ownership at Work are today launching ‘A Shares for Debt Recovery Plan’. This outlines routes through which Bounce Back Loans could be converted into Employee Ownership Trusts to ensure the survival of businesses and help close the UK’s productivity gap.
The groups want to grant small businesses a time-limited amnesty under which Bounce Back Loans would be written off in exchange for all-employee equity stakes vested in EOTs – a vehicle defined by Schedule 37 of the 2014 Finance Act. The private lenders writing the Bounce Back lenders would write off and claim their 100 per cent guarantees in these instances.
The option would initially be open to borrowers who are constituted as companies by limited shares. It could be rolled out to other businesses at a later date.
The groups argue that providing this option to firms would have the dual effect of protecting viable businesses and jobs while spurring productivity. In 2018, the Employee Ownership Association highlighted the benefits of EOTs, especially where productivity is concerned,