Extensive government support for businesses during the pandemic protected many companies from the threat of insolvency but loan repayments will shake up resilience, warns Steve Thomas, partner at Excello Law
According to recent figures, the number of UK insolvencies last year remained surprisingly low. The primary reason for this is self-evident: during the pandemic, troubled businesses were kept afloat by the UK government’s extensive Covid-19 support measures, including the bounce back loan scheme (BBLS) and the furlough scheme, which was described by Boris Johnson in January 2022 as ‘the biggest and most generous scheme of its kind anywhere in the world’.
Their aim was to prevent a liquidity crisis turning into a solvency crisis that would precipitate widespread business failure and permanent economic harm. The government’s primary policy objective was therefore to prevent viable businesses going under because of a liquidity crisis.
