The FT’s coverage of British Business Bank’s audit of Future Fund investments (“UK government investment fund heavily backed ‘zombie business,'” Report, Aug. 8) highlights a critical problem facing small and medium-sized businesses today, and something that lenders and investors are becoming more wary of.
Unfortunately, it is true that there are many companies in the UK that are simply looking to access finance to reduce their debt load, with no growth prospects, thus creating zombie-like businesses. This legacy of Covid has been further exacerbated by the worsening economic and geopolitical situation. However, we must recognize that supporting all businesses indiscriminately will deplete vital funds from the businesses that will drive future economic growth.
While it is critical that we continue to support entrepreneurship and business, it is inevitable that public and private credit providers will need to be more selective in assessing which companies have realistic growth prospects versus those that are destined to fall off a cliff of default. of payment. .
A permanent government ‘good loan’ scheme with stricter lending criteria would go a long way in channeling funds to support these businesses at this critical time for the UK economy.
Executive Director, Manx Financial Group
Managing Director, Bank Conister
Douglas, Isle of Man