There has been a 65 per cent uptick in write-offs of loans to restaurants and hotels during the pandemic,
Banks have written off £99m in the year to March 2021, up from £60m the previous year, according to research by international audit firm Mazars.
Write-offs in lending to the leisure sector have began to rise again as businesses struggle with costs after the lockdown while government support tapers off.
Banks are increasingly writing unpaid loan repayments off as bad debts, according to Mazars.
Hospitality businesses will feel the impact of the end of support schemes, the repeated cost of reopening and restocking and recruiting staff.
Some venues have also suffered with a fall in customers as people’s lifestyles have changed since the pandemic, such as home workers staying away from city centres.
Financial support ending this autumn includes the Coronavirus Job Retention Scheme, which saw the government pay 80 per cent of furloughed employee’s wages. The scheme will end totally at the end of September.
The moratorium on winding up petitions will end on September 30 while 2021 the suspension on landlord action for rent arrears will end in March 2022.
There are fears the number of insolvencies in the sector will rise dramatically when support stops.
“It is clear that we have yet to see the full extent of the pandemic’s financial impact on hotels and restaurants. However, the data is now starting to show more signs of stress in the sector,” Rebecca Dacre, partner at Mazars, said.