Small shops are struggling under £1.7bn debt, the former retail chief of Iceland, has warned.
Independent businesses’ borrowing increased fourfold during the pandemic, according to the report.
While the money borrowed has allowed small shops to survive, the task of paying back the loans still looms over them, said Bill Grimsey, the author of the report into how independent businesses have adapted to survive the pandemic.
The levels of “unsustainable” debt could lead to a “tsunami” of store closures as UK re-opens, unless the government steps in, said Bill Grimsey, the former head of Wickes, Iceland and Focus DIY.
The review into the future of the high street called for the loans to be written off for viable small businesses.
Grimsey said the UK government should consider a similar approach to that of the French government who, he said, had proposed converting pandemic support loans into grants.
A Treasury spokesperson told the BBC: “Our unprecedented £350bn Covid support package has provided a lifeline to hundreds of thousands of businesses across the UK – through loans, grants, tax cuts, business rates holidays and the furlough scheme.
“The government has always been clear that Bounce Back Loans are loans to be repaid and that they may not be the right answer for all businesses.
“We’ve provided further support and flexibility to businesses that took out Bounce Back Loans by introducing the Pay as You Grow options, so that loan terms can be extended, monthly repayments reduced and a repayment holiday taken for up to six months.”