A LEADING accountant has urged independent high street business owners to seek immediate help if they are being sucked into a debt black hole.
New figures show pre-pandemic borrowing for independents was £483 million - but extra borrowing through Bounce Back Loans is estimated to be £1.7bn.
With many of the loans now being repaid, business owners whose companies have not recovered from the pandemic are facing a mountain of debt.
Paul Hornby, the managing director of JF Hornby & Co, said: “It’s so easy to bury your head in the sand - to ignore mounting debts, increasing financial turmoil and hope it will go away.
“The reality is that it will not, and situations will only worsen the longer they are left. Debt can become a vicious circle of decline which ultimately affects a business’ health and the mental and physical health of its owner.
“Funds were freely available during the height of the pandemic as the government sought to shore up businesses with loan schemes. Reality is now biting as repayment of those loans is beginning.”
The influential report by former Wickes and Iceland boss Bill Grimsey is titled “Against the Odds”.
It says independent high street businesses owe four times what they did one year ago “Our High Street independents have experienced a new-found appreciation during lockdown,” said Grimsey.
“But they’ve also been forced to take on Government-backed loans, which they would not have normally been able to get because their balance sheets wouldn’t allow it. Now they are struggling to manage a mountain of debt and need help.”
A retail expert last year said nearly half of retailers were in danger of “going bust” even before the pandemic, but a boom in online shopping had hastened the process, adding the “old high street is finished”.
Last month, Paul Hornby urged consumers to vote with their feet and support local as he underlined the importance of supporting local businesses: “The new statistics simply underline that need,” he said.
“My message remains that we must shop and support local independent businesses - but those businesses must seek urgent help if they are facing a debt mountain that appears insurmountable.
“Their accountants should be by their side during this challenging time. Insight, advice and support is the order of the day. While we can’t make the debts disappear, we can certainly advise on the best steps forward.”