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The Association of Accounting Technicians (AAT) has urged Chancellor Rishi Sunak to write off coronavirus bounce-back loans to help the UK economy recover amid the ongoing pandemic.
So far, the bounce-back loan scheme, backed by the UK Government, has provided over £38bn of finance to small businesses.
Last week, however, Sunak announced a ‘pay as you grow’ scheme, extending the time frame to repay bounce-back loans from six years to 10.
The AAT said it agrees with Sunak’s assessment that now is not the time to be worrying about repaying loans, but believes he should go further and write off the multi-billion pound loans to SMEs.
The professional body’s proposal follows a similar call from former Conservative Chancellor George Osborne, who in June this year told the Treasury Select Committee that debt forgiveness would be ‘unpopular with Treasury officials but was the best way forward’.
Debt forgiveness would provide ‘much-needed boost’ for SME sector
Phil Hall, head of public affairs and public policy at the AAT, said:
’Extending the repayment period doesn’t solve anything, it just defers the problem.
’In contrast, writing the debt off for small businesses would provide a much-needed boost for the SME sector, enable a speedier recovery, more growth, more investment and in the long term benefit the taxpayer overall.’
Hall added: ‘AAT recognises that such a move would not prove popular with everyone, but economic reality needs to take precedence in situations like this.’