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What are some good plans that could be considered when you repay debts for your business?

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Leading UK
What are some good plans that could be considered when you repay debts for your business?

Debt is not something new to many corporate businesses; it’s usually manageable. However, the level of debt being held by corporate businesses in the UK is significantly higher than previous years due to the COVID-19 pandemic. A study by The Recapitalisation Group, formed by The City UK, a finance industry body, has suggested that corporate debt taken on since the pandemic hit the UK’s economy is a staggering £35 billion.

Whilst the IMF reports that 62% of businesses have managed to continue trading, albeit at a lower turnover, 42% of businesses are sitting on cash reserves that will last no more than six months. With many City giants predicting that come March 2021 when much of the government-backed loan schemes taken on by businesses is due to be paid back, the final figures could be much worse.

Although optimism is high, particularly among SMEs, boosted by the rise in inflation of 0.6% in June, the reduction in VAT and with interest rates continuing at a record low, there is also the unemployment crisis that’s being predicted the longer the pandemic goes on. Add in a forecasted 2.4% drop in property prices for 2020, predicted to increase to 11.7% in 2021, as well as a potential hit on manufacturing businesses that could be brought about by Brexit, it becomes a heady mix of difficult decisions to make.

Whether you’re one of the businesses that has managed to continue trading, or one that is suffering badly with cash flow, or low cash reserves, now is definitely not the time to sit on your laurels or bury your head in the sand about corporate debt levels. All is definitely not lost. Taking on loans is not always the right option, particularly if there is already a level of debt. However, there are a number of options to consider that will help deal with debt issues.

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