SME estate agencies and other similarly-sized property industry firms should be given more time to repay loans taken out under the government’s Coronavirus Business Interruption Loan Scheme (CBILS), with one tax expert calling for repayment terms to be extended to 10 years.

A number of firms took advantage of the scheme, which was delivered through the British Business Bank’s accredited lenders, such as Fiduciam, with a view to supporting the continued provision of finance to companies that qualified during the early phase of the pandemic.

The CIBLS, launched on 23 March by the Department of Business, Energy and Industrial Strategy for SME businesses with turnovers of up to £45m, provided loans of up to £5m, 80% of which is guaranteed by the government.

Following the government’s decision this week to relax repayment terms for Covid Bounce Back Loans, with agents, among other businesses, that took out risk-free Covid loans offered more generous repayment terms, tax and advisory firm Blick Rothenberg is now calling on the government to consider stopping repayments under the CBILS scheme and introducing more favourable terms for borrowers.

Richard Churchill a partner at the firm said: “Borrowers under the CBILS scheme need the same options as those of the Bounce Back loan scheme, if the government is serious about allowing businesses to pay as they grow.

“The government needs to be more creative in its solutions and be equitable to both itself and business owner, which it is not at the moment.

“Interest-only payments for the CBILS scheme should be made for up to six months, available three times during the period of the loan. Repayments should immediately be paused for up to six months for those borrowers who need further assistance.

“The Chancellors announcement on Friday was not new. It was a reinforcement of his November message in the Winter Economic Plan statement.”

“Whilst these steps will be welcomed by Bounce Back Loan borrowers, where loans were a maximum of £50,000. It remains for many, pay as you survive, as opposed to pay as you grow. This which is not a great strategy on the part of the government.”

The measures allow businesses a longer time to repay their debts and flexibility on payment holidays but no new funding.

“As the first payment dates for Bounce Back Loans approach this will help businesses survive, but this does not create growth or more importantly address the same issues for larger business that borrowed under the CBIL scheme, according to Churchill.

He added: “When the Bounce Back Loan scheme was introduced, the limit on borrowings was £50,000. Many any borrowers have already drawn their maximum entitlement when struggling to bounce back after lock down one, never mind coping with lockdown two or three.

“To ensure  that companies who borrowed under the Bounce Back scheme can bounce back again, the government needs to revisit the maximum lending criteria for viable businesses and increase the scheme to £100,000. This would make a real difference.”

“For those borrowers under the CBIL, scheme the same measures need to be urgently addressed as they approach the first payments due under that scheme. The current repayment profile of repaying these debts over five years results in high monthly payments. This will cause financial difficulty for many businesses as they seek to get back on their feet.

“As well as forcing businesses to make decisions not in their best long terms interest when deciding which debts, it can repay, if the business also has traditional bank borrowing from banks.

“High levels of debt for businesses are unhealthy, stifling reinvestment which could limit diversification and development. A repayment profile for CBIL lending linked to profitably needs to be explored.”