{"id":835644,"date":"2025-03-21T08:12:10","date_gmt":"2025-03-21T13:12:10","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2025\/03\/21\/constructions-forgotten-covid-debt-burden-revealed\/"},"modified":"2025-03-21T08:12:10","modified_gmt":"2025-03-21T13:12:10","slug":"constructions-forgotten-covid-debt-burden-revealed","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2025\/03\/21\/constructions-forgotten-covid-debt-burden-revealed\/","title":{"rendered":"Construction\u2019s \u2018forgotten\u2019 Covid debt burden revealed"},"content":{"rendered":"
\n

Only one in 10 emergency Covid loans issued to building companies have been paid back, Construction News<\/em> can reveal.<\/p>\n

As the fifth anniversary of the first Covid lockdown in the UK approaches, an investigation by CN<\/em> has shown that just 30,282 (11.6 per cent) of the 260,912 loans issued to small construction businesses have been fully recouped.<\/p>\n

Under a Freedom of Information request, data obtained from the British Business Bank also revealed that almost a third of small construction firms \u2013 some 75,464 \u2013 had defaulted on their bounce back loan repayments within the past five years. As of 31 January this year, 12,589 were still in arrears.<\/p>\n

The bounce back loans were introduced by the government in the months following the first lockdown, allowing small businesses to access up to \u00a350,000.<\/p>\n

Companies with a turnover of up to \u00a345m were able to unlock up to \u00a35m under the Coronavirus Business Interruption Loan Scheme (CBILS).<\/p>\n

CBILS loans, introduced in April 2020, came with 80 per cent government guarantees for lenders; bounce back loans, which began in May 2020, had 100 per cent guarantees in place.<\/p>\n

The figures showed only 37 per cent of the 14,688 CBILS loans obtained by construction companies had been paid back to date.<\/p>\n

By the end of January, 1,655 businesses had defaulted on CBILS loans, while 190 remained in arrears.<\/p>\n

In April 2020, Sean Tucker, managing director of Lincolnshire-based contractor Evergreen, told CN<\/em> that pandemic-induced trading conditions meant his business was going to run out of money within two months<\/a>.<\/p>\n

He later secured an \u00a380,000 CBILS loan and transformed the company\u2019s business model<\/a>, switching to management contracting rather than design and build.<\/p>\n

Speaking to CN<\/em> this month, Tucker said Evergeen had paid off its CBILS loan.<\/p>\n

However, its sister development company Goodwin & Tucker, which he runs, is still paying off its CBILS loan.<\/p>\n

\u201cWe took those loans out to keep ourselves going and they\u2019ve been a big cost to us,\u201d he said. \u201cYou just can\u2019t expand a business while you\u2019re paying off those loans. You\u2019re going to work to pay back the loans that you took to keep the company going in the first place. When we finally pay it off, it will mean we can invest back into the business.\u201d<\/p>\n

Four years on, and buffeted by rising costs since the outbreak, he has not returned to contracting, only taking on new-build jobs for a select few clients.<\/p>\n

\u201cWe\u2019re developing industrial units and we\u2019re pushing our architectural and project management consultancy side because we just couldn\u2019t control [costs on] the contracting side of it,\u201d he said.<\/p>\n

DRS Bond Management managing director Chris Davies said the statistics were \u201cpretty damning\u201d.<\/p>\n

\u201cSome of the people who got these loans would not have got them under normal monetary circumstances because the banks don\u2019t lend [much] to the construction industry and unfortunately this underscores why they don\u2019t,\u201d he said.<\/p>\n

On the low proportion of loans that had been fully repaid, he added: \u201cIt\u2019s a forgotten debt burden. Covid now seems like a lifetime ago, but people are still carrying the legacy of it on their balance sheet.\u201d<\/p>\n

Construction Products Association head of construction research Rebecca Larkin said material inflation, fuel, energy and labour costs had rocked the industry in the years since 2020.<\/p>\n

\u201cFor a construction firm working in a sector where growth has been slower to return, or dropped off sharply over the past 18 months, such as housebuilding or large home improvements, this combination will have squeezed balance sheets and left little spare for loan repayments.<\/p>\n

\u201cLinked to this, construction insolvencies have reached the highest level since the global financial crisis over this period too, and the knock-on effect to those firms still active will also have constrained finances, with smaller businesses and specialist contractors \u2013 most likely to have been recipients of the bounce back loans \u2013 the worst hit,\u201d she said.<\/p>\n

Tucker said if the loans had not been issued the sector would have been in dire straits, but the long term effects are stark.<\/p>\n

\u201cNo wonder we\u2019re finding everything has to go up \u2013 planning costs, national insurance costs, all the other changes, they\u2019re having to recoup that money from somewhere,\u201d he said.<\/p>\n

He called on policymakers to see the benefits the building industry brings to the country. \u201cWe\u2019ve been through a lot of trauma and it needs time to heal,\u201d he said.<\/p>\n

\u201cWe can\u2019t keep having more and more red tape and more taxes put on us because it\u2019s just more bills to pay.\u201d<\/p>\n<\/div>\n

Read More<\/a>
\n Ian Weinfass<\/p>\n","protected":false},"excerpt":{"rendered":"

Only one in 10 emergency Covid loans issued to building companies have been paid back, Construction News can reveal. As the fifth anniversary of the first Covid lockdown in the UK approaches, an investigation by CN has shown that just 30,282 (11.6 per cent) of the 260,912 loans issued to small construction businesses have been<\/p>\n","protected":false},"author":1,"featured_media":835645,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[100664,1188],"tags":[],"class_list":{"0":"post-835644","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-constructions","8":"category-forgotten"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/835644","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=835644"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/835644\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/835645"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=835644"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=835644"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=835644"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}