Construction Industry’s Ongoing Covid Debt Crisis

‘Five years after the pandemic, construction businesses continue to struggle with emergency loan repayments‘

As we approach the fifth anniversary of the UK’s first Covid lockdown, recent data has revealed the extent to which construction businesses are still burdened by pandemic-related debt. According to information obtained from the British Business Bank, the vast majority of emergency loans issued to construction businesses remain outstanding, creating ongoing financial strain across the sector.

The Concerning Statistics

Based on recent industry reporting, the situation for construction companies remains challenging:

• Only about 11% of loans issued to small construction businesses have been fully repaid
• Nearly one-third of small construction firms have defaulted on their Bounce Back Loan repayments
• As of early 2025, thousands of construction businesses remain in arrears
• Just over a third of CBILS loans (Coronavirus Business Interruption Loan Scheme) to construction companies have been paid back

The Personal Guarantee Problem

As our debt strategists have been working directly with affected construction firms, we’ve witnessed firsthand the particularly troubling impact of CBILS loans where personal guarantees were involved.

While Bounce Back Loans came with 100% government guarantees for lenders, CBILS loans only carried 80% protection. This crucial difference meant many lenders required personal guarantees from business owners for the remaining 20% – a detail that was often overlooked during the crisis.

Now, five years later, we’re seeing numerous cases where construction business owners face losing personal assets, including family homes, due to defaulted CBILS loans with personal guarantee clauses.

A Perfect Storm for Construction

The industry hasn’t just been dealing with Covid debt. Multiple factors have compounded the problem:

• Significant material price inflation since 2020
• Rising fuel and energy costs
• Increased labor expenses
• Slowdowns in key sectors like housebuilding
• Supply chain disruptions

Our clients consistently report this combination of challenges – trying to manage emergency loan repayments while simultaneously facing unprecedented input cost inflation and challenging market conditions.

The Business Impact

The effects of this debt burden on construction businesses include:

1. Stunted growth – Companies are unable to invest in expansion while servicing emergency debt
2. Business model changes – Many contractors have had to fundamentally alter their operations to survive
3. Reduced risk appetite – Businesses are taking on fewer speculative projects
4. Delayed investment – Essential equipment and technology upgrades are being postponed
5. Cash flow constraints – Working capital is being diverted to loan repayments

Construction Insolvencies Rising

Perhaps most concerning is that construction insolvencies have reportedly reached their highest level since the global financial crisis. Our case data supports this alarming trend, with construction firms representing our fastest-growing client segment for insolvency advice and debt restructuring services.

How We Can Help

If your construction business is struggling with CBILS or Bounce Back Loan repayments, especially if personal guarantees are involved, it’s crucial to seek professional advice immediately. 

Our specialist team offers expert support in the following areas:

Insolvency Protection Strategies – We provide strategic solutions to help safeguard both business and personal assets.

CBILS Personal Guarantee Assessment – We’ll review your loan agreements to assess your personal exposure and identify potential risks.

Debt Restructuring Options – We negotiate with lenders on your behalf to explore more favorable repayment terms.

Looking Forward

The construction sector requires supportive policies that recognise both its vital economic contribution and the unprecedented challenges it has faced. Until such policies are implemented, seeking expert debt advice remains the best path forward for many struggling construction firms.

At Bell & Company our team specialises in helping construction business owners navigate these complex financial challenges, with particular expertise in addressing personal guarantee liabilities associated with CBILS loans. Contact us today for a confidential case review about your situation.

Click here to read our Construction Debt Guide: Directors’ Handbook

Note: This article references information obtained from the British Business Bank regarding Covid emergency loan repayment rates in the construction industry, as reported in industry publications in March 2025.

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