British financial sector is proposing the repackaging of several 35 billion pounds ($44 billion) of state-backed Covid-19 corporate relief loans to make sure taxpayers do not foot the bill.

The government introduced the state-guaranteed loans after a Covid-19 lockdown in March, which forced thousands of companies, from large to small, to shut down for several months.

TheCityUK Chair Adrian Montague said at a City & Financial online event that many businesses are swimming hard to stay afloat and can’t face up to the challenge of repaying the debt.

TheCityUK said that it will send its report that recommends the transfer of state-guaranteed loan into an arm’s length body to the finance ministry this month.

Lloyd’s Bank Chairman Norman Blackwell said that the debt can be replaced by some kind of tax paying obligation as the report recommends, or converted into long-term capital.

Blackwell added that the government or the new body would have to find ways to bring in private finance as well as remove it from the public sector balance sheet at an appropriate discount.

Recapitalized firms would retain control of themselves.

Repayments on the loans, administered by banks, were planned to start in March. But a third of businesses taking them will struggle to repay unless they are recapitalized, Omar Ali of EY consultancy said. Around 750,000 small and medium sized businesses and more than 3 million jobs are at threat.

Unsustainable corporate debt can reach 100 billion pounds in total, with government-backed debt a third of that, he added.

The finance ministry’s director general for financial services Katharine Braddick said banks have to tread carefully because of the “spectre of GRG”, a reference to the mistreatment of small firms last decade by Royal Bank of Scotland.

According to Blackwell, there is a challenge for banks in scaling up our business support units to be able to handle all this and to do so sensitively.