Originally written by Timothy Adler on Small Business
The government should consider converting “unmanageable” levels of Covid debt into shared company ownership, the Federation of Small Businesses has urged.
Four out of 10 small businesses called their level of debt “unmanageable” in a FSB report published over the weekend.
Nearly half of those surveyed used personal finance products such as personal credit cards, overdrafts and loans to keep their businesses going.
Shared ownership means employees owning shares in the businesses they work for. Famous employee-owned businesses include John Lewis and, most recently, Richer Sounds, which was taken over by its employees in May last year.
Currently, 370 UK companies are categorised as employee-ownership SME businesses, 61 per cent have changed ownership in just the past five years.
Employee-owned businesses in Britain are currently worth £20.1bn between them, employing 178,000 people.
The FSB told The Times that emergency Covid debt could be assigned to an employee ownership trust in return for the trust getting preference shares in the business of the same value, plus an option to acquire 10 per cent of the business when there is a future change of control. Turning Covid debt into shared ownership would move the debt off the company’s balance sheet, the
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