London hospitality operators including The Piano Works, Kerb and bar business Lolipop have called on government to adapt the Enterprise Investment Scheme (EIS) to help rebuild the sector.

In a letter to chancellor Rishi Sunak seen by City AM, the businesses outlined proposals of an “equity alternative” to the Coronavirus Business Interruption Loan Scheme, which would use tax relief to incentivise investors to support industry recovery.

Currently, the EIS allows financial backers to access income tax relief on up to 30% of their investment up to a limit of £1m, but the letter, which is co-signed by UK Hospitality and the Night Time Industries Association, proposed relief at the point of investment in hospitality business should be increased to 75% for the next 24 months, offset by the removal of loss relief.

The letter also said that older and larger businesses should be eligible to benefit from the scheme – the EIS is currently restricted to firms that have been operating for fewer than seven years and have fewer than 250 full-time employees - and the investment should be approved to be used to repay CBILs and make acquisitions.

Piano Works founder Alan Lorrimer, who had to take out a six-month CBIL in March and is yet to reopen his two sites, said that hospitality balance sheets are “hugely overleveraged” and warned that without extra help “so many places will go for good.”

Changes to the EIS rules would incentivise funding for “what would be a hugely successful business in three to four years’ time, as a long-term investment,” he told City AM. “We know the public will come flocking back to the venues they love so much as soon as they are able, and we want as many businesses as possible to still be around for the next roaring twenties.”