The chair of UKHospitality has made a plea to the government to extend the repayment terms for CBILS (Coronavirus Business Interruption Loans) in order to safeguard the "survival of thousands of businesses in the hospitality sector."
In a letter addressed to the secretary of state for business and trade on 10 July, Kate Nicholls highlighted that "a significant number of businesses" are still in the process of repaying bounce-back loans and CBILs, with interest rates on repayments now reaching "approximately 8%-10%."
Furthermore, she expressed dissatisfaction with the inflexibility displayed by HMRC concerning the application of Time To Pay concessions for businesses that have meticulously adhered to cashflow documentation.
These concerns arise in the wake of a recent report by Sky News which revealed that 3,347 restaurants have defaulted on their debts in the past two years until March 2023, translating to an average of six restaurants a day in the first three months of 2023.
Kate Nicholls commented:
"We propose that the government work with the British Business Bank to put forward a new set of conditions for the extension of CBILs, with a presumption in favour of extension for businesses that have adversely, in the short-term, been affected by the energy crisis.
This should also have no impact on a business's credit rating as it would be considered a standard re-financing. Alongside this advice should be given to HMRC to take a more lenient approach to Time To Pay.
A further measure to support business at this time would be to extend the guidance the chancellor gave to banks in relation to mortgages, with no fault payment delays, to business customers.
UKHospitality's recent member survey also emphasised that the hospitality sector remains under "extreme pressure" due to soaring energy costs. The survey disclosed that 30% of businesses expressed concerns about the potential failure of their establishments within the next year, with 94% of respondents attributing these fears to the ongoing energy crisis.
In response to the situation, she has extended an offer to meet with the business secretary and facilitate bilateral discussions with impacted businesses. The objective is to secure "the survival of thousands of businesses in the hospitality sector."