Over 350 construction companies have defaulted on their Covid loans at least once. Around 2.5% of all the construction companies who claimed Covid loans have defaulted on repayments, which could indicate a wave of administrations.
The warning comes from the accountancy company Price Bailey, which compiled the research through the Freedom of Information Act. The scale of defaults in construction is much more than in other sectors, with about 1.3% of arts and entertainment firms and 0.8% of healthcare firms defaulting on their loans. The Coronavirus Business Interruption Loan Scheme (CBILS) programme was closed to new applications at the March end of last year, with a year’s grace time before firms had to begin repaying. That could mean many companies have only just begun to pay back the loans, Price Bailey's analysis indicates. Civil Engineering Contractors Association (CECA) chief executive Alasdair Reisner said the CBILS loans were introduced during a national emergency. The firms were necessary to ensure our industry continued to function, constructing and maintaining the infrastructure that is fundamental both to quality of life and the economic health, he said. While a small minority of construction companies may be facing problems in repayment, this must be set in the broader context of inflationary pressures and the substantial growth in fuel prices in recent months. No industry took out more CBILS loans than construction firms in the first months of the Covid-19 pandemic, with companies securing loans of £7.93 billion by the start of October 2020. Price Bailey associate Chand Chudasama said construction companies were being pressed from multiple angles with material and labour deficiencies hitting hard and some demand for construction work dropping. Defaults on CBILS are an early sign of likely insolvencies to come, he said. In many cases, it could be several months before firms that have defaulted on CBILS repayments encounter debt recovery action from creditors. Approximately 14,200 construction companies claimed the loans. In the UK, more than 97,000 companies from a variety of sectors applied for loans, of up to £5 million individually. Image Source Also read: Here's how the 4D model can help the construction industry
