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Small firms want support loans converted into employee shares

A report from the Federation of Small Businesses (FSB) and think-tank Ownership at Work suggests small firms that that took out state-backed loans amid the pandemic should be allowed to convert the loan into shares for employees and write off the debt. Figures show that around 1.5m loans worth a combined £46.5bn were approved under the Bounce Back Loans Scheme, with the Office for Budget Responsibility warning that up to 40% of borrowers could default. Martin McTague, the FSB's national vice chairman, has warned that leaving banks to enforce collection of loans risks the destruction of a number of ultimately viable companies. He suggests that allowing struggling firms to swap debt for employee equity could “protect livelihoods, spur productivity and pave the way for a small business-led recovery”. The Daily Telegraph

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