Experts in Helping With Issues Around Bounce Back Loans.

I am a Director of a LTD business, what happens to me if I can't pay?

I need to close my business, what happens to the bounce back loan?

I used the loan for more than my business, are HMRC likely to investigate?

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The Bounce Back Loan Scheme (BBLS) was the saviour of many small businesses during the pandemic.

Between May 2020 and June 2021, lenders approved over 1.5m Bounce Back Loans, totalling £47.36bn.  The fast access to funds that the BBLS provided stopped a lot of organisations from going into liquidation during lockdown. But now that the dust has settled and life for many is getting back to normality, some businesses are struggling to make the repayments on their loans. The conflict in Ukraine, high energy prices, the rising cost of living and the lowest consumer confidence ratings since 2008  means that some businesses aren’t ‘bouncing back’ in the way they might have hoped. If you’re one of the businesses that are facing challenges repaying your Bounce Back Loan – you don’t have to face it alone. The best thing you can do is to seek advice as early as you can.

What was the Bounce Back Loan?

The Bounce Back Loan Scheme was launched in May 2020, following feedback from businesses that the Coronavirus Business Interruption Loan Scheme (CBILS) made it difficult for smaller businesses to access finance. Bounce Back Loans provided small businesses with fast access to funds between £2,000 and £50,000 - capped at of 25% of their turnover. There was intentionally very little red tape involved in the process, with the priority being on providing businesses with the fast lifeline they needed to stay afloat. Businesses were responsible for self-certifying to access the scheme, and only needed to answer 7 questions on an online form to apply. Bounce Back Loans were provided to businesses by a network of 29 different lenders and were 100% backed by the Government. Businesses did not have to make any repayments for the first 12 months of their loan.

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What were the terms and conditions of the Bounce Back Loan?

The initial term of the loan was 6 years. The first 12 months were interest free (with no payments due), with interest rates of 2.5% per year applicable after. Although the loans were 100% backed by the Government, it was made clear that businesses would be responsible for repaying any amount borrowed, plus any interest due. In September 2020, Rishi Sunak announced additional flexibility for businesses that had taken advantage of Bounce Back Loans, with the introduction of ‘Pay As You Grow’ (PAYG). Under PAYG, once businesses had begun paying back their loan, they had three options to help them with their repayments:

they could request an extension to their loan term, from 6 years to 10 years.

they could request to pay ‘interest only’ for a period of six months.

they could take a payment holiday for up to 6 months.

These new measures could be used in combination with each other, and were implemented in anticipation of some businesses struggling to pay back their loans on the original terms. Yet despite the additional flexibility offered by Pay As You Grow, the repayment of Bounce Back Loans is still proving a challenge for some businesses in the current climate.

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What happens if I’m a sole trader and I can’t repay the Bounce Back Loan? Will I be personally liable?

Bounce Back Loans are an unsecured debt. There is no personal guarantee attached to the loan, and the Government are essentially your guarantor with the lender, backing 100% of the loan value. If you’re a sole trader who usually has to risk your own assets to secure finance, the terms of the Bounce Back Loan means that none of your personal assets such as your home or your primary vehicle are at risk. However, it’s still unclear how banks are pursuing sole traders that default on their Bounce Back Loan. Even though your personal assets are protected, your business assets may still be eligible to be seized. In terms of the best way to approach things, a lot depends on your individual circumstances, and any other debts your business may have. You should speak to advisor to assess your situation before considering formal routes such as Individual Voluntary Arrangements (IVAs) or bankruptcy.

What happens if I’m the Director of a limited company and the business cannot repay the Bounce Back Loan?

If you’re the Director of a limited company that is unable to repay the Bounce Back Loan, the debt lies with your company and not yourself personally. Assuming you have undertaken your responsibilities as a Director properly, you are likely to have more personal protections than a sole trader. However, if your business is unable to fulfil financial obligations it will be classed as insolvent. The normal process to properly close an insolvent business is to go through a process of liquidation. When a company enters into liquidation, there will be an investigation into the affairs of the business, how the business became insolvent, and the Director’s conduct over the past 3 years. If you’ve received a Bounce Back Loan, part of the liquidation investigation will look into how these funds were allocated - ensuring that any funds were used for the genuine economic benefit of your business, and not for personal gain. If you are found to have misused the funds from a Bounce Back Loan, there can be serious legal and financial consequences. So, before you consider liquidation of your company, please speak to a qualified advisor who will be able to confirm that your Bounce Back Loan was spent correctly, and that no legal challenges or financial penalties will occur.

Can I dissolve my company with an outstanding Bounce Back Loan?

In short NO as the Bank will object to this application. You can only close it through a formal process of liquidation, however its imperative you understand the whole process and the role of the Insolvency practitioner first before engaging them.  The Directors Helpline will assess everything before you decide that this is the right route for you.

What could the Bounce Back Loan be used for?

There were no detailed rules for how a Bounce Back Loan could be spent, but there were broad guidelines that it should be used for the ‘economic benefit’ of the business and should not be used for personal gain. Common legitimate uses of the loan included paying company bills, purchasing stock or supplies, and paying staff wages.

I’m struggling to repay my Bounce Back loan – where can I find help?

If you’re struggling to repay your Bounce Back Loan, it’s important to understand that you’re not on your own. We’ve supported many businesses that were also struggling with Bounce Back Loan repayments. We understand how stressful the situation can be, and we want to help you through it. The best thing you can do is to speak to someone as soon as you can. When you get in touch with The Directors Helpline, we’ll help you understand the options that are available to you in your unique set of circumstances. We operate independently, with no obligation, and our experienced staff are available to chat with you 7 days a week. We’ll provide you with all the information you need to decide how you want to proceed, in a way that makes the most sense for both yourself and your company. Get in touch, and let’s work through this challenge together.

Independent and in your corner

Without guidance, directors can be pressured unfairly into insolvency. Unlike insolvency practitioners, The Directors helpline will always represent you and your company, not your creditors.

We assess all the ways forward

We'll explain your company debt liabilities, accountancy solutions and restructuring options but we know your business is different to every other business. So, together, we decide how to proceed in a manner you're comfortable with.

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Company Recovery experts

With over 10 years experience it is our aim to get you and your company the best possible outcome during an uncertain time. The Directors Helpline put 100% in to helping you and your company reach the correct solution.

The Bounce Back Loan Scheme (BBLS) was the saviour of many small businesses during the pandemic.

Between May 2020 and June 2021, lenders approved over 1.5m Bounce Back Loans, totalling £47.36bn.  The fast access to funds that the BBLS provided stopped a lot of organisations from going into liquidation during lockdown. But now that the dust has settled and life for many is getting back to normality, some businesses are struggling to make the repayments on their loans. The conflict in Ukraine, high energy prices, the rising cost of living and the lowest consumer confidence ratings since 2008  means that some businesses aren’t ‘bouncing back’ in the way they might have hoped. If you’re one of the businesses that are facing challenges repaying your Bounce Back Loan – you don’t have to face it alone. The best thing you can do is to seek advice as early as you can.

What was the Bounce Back Loan?

The Bounce Back Loan Scheme was launched in May 2020, following feedback from businesses that the Coronavirus Business Interruption Loan Scheme (CBILS) made it difficult for smaller businesses to access finance. Bounce Back Loans provided small businesses with fast access to funds between £2,000 and £50,000 - capped at of 25% of their turnover. There was intentionally very little red tape involved in the process, with the priority being on providing businesses with the fast lifeline they needed to stay afloat. Businesses were responsible for self-certifying to access the scheme, and only needed to answer 7 questions on an online form to apply. Bounce Back Loans were provided to businesses by a network of 29 different lenders and were 100% backed by the Government. Businesses did not have to make any repayments for the first 12 months of their loan.

What happens if I’m a sole trader and I can’t repay the Bounce Back Loan? Will I be personally liable?

Bounce Back Loans are an unsecured debt. There is no personal guarantee attached to the loan, and the Government are essentially your guarantor with the lender, backing 100% of the loan value. If you’re a sole trader who usually has to risk your own assets to secure finance, the terms of the Bounce Back Loan means that none of your personal assets such as your home or your primary vehicle are at risk. However, it’s still unclear how banks are pursuing sole traders that default on their Bounce Back Loan. Even though your personal assets are protected, your business assets may still be eligible to be seized. In terms of the best way to approach things, a lot depends on your individual circumstances, and any other debts your business may have. You should speak to advisor to assess your situation before considering formal routes such as Individual Voluntary Arrangements (IVAs) or bankruptcy.

What happens if I’m the Director of a limited company and the business cannot repay the Bounce Back Loan?

If you’re the Director of a limited company that is unable to repay the Bounce Back Loan, the debt lies with your company and not yourself personally. Assuming you have undertaken your responsibilities as a Director properly, you are likely to have more personal protections than a sole trader. However, if your business is unable to fulfil financial obligations it will be classed as insolvent. The normal process to properly close an insolvent business is to go through a process of liquidation. When a company enters into liquidation, there will be an investigation into the affairs of the business, how the business became insolvent, and the Director’s conduct over the past 3 years. If you’ve received a Bounce Back Loan, part of the liquidation investigation will look into how these funds were allocated - ensuring that any funds were used for the genuine economic benefit of your business, and not for personal gain. If you are found to have misused the funds from a Bounce Back Loan, there can be serious legal and financial consequences. So, before you consider liquidation of your company, please speak to a qualified advisor who will be able to confirm that your Bounce Back Loan was spent correctly, and that no legal challenges or financial penalties will occur.

  • This field is for validation purposes and should be left unchanged.

What could the Bounce Back Loan be used for?

There were no detailed rules for how a Bounce Back Loan could be spent, but there were broad guidelines that it should be used for the ‘economic benefit’ of the business and should not be used for personal gain. Common legitimate uses of the loan included paying company bills, purchasing stock or supplies, and paying staff wages.

What were the terms and conditions of the Bounce Back Loan?

The initial term of the loan was 6 years. The first 12 months were interest free (with no payments due), with interest rates of 2.5% per year applicable after. Although the loans were 100% backed by the Government, it was made clear that businesses would be responsible for repaying any amount borrowed, plus any interest due. In September 2020, Rishi Sunak announced additional flexibility for businesses that had taken advantage of Bounce Back Loans, with the introduction of ‘Pay As You Grow’ (PAYG). Under PAYG, once businesses had begun paying back their loan, they had three options to help them with their repayments:

they could request an extension to their loan term, from 6 years to 10 years.

they could request to pay ‘interest only’ for a period of six months.

they could take a payment holiday for up to 6 months.

These new measures could be used in combination with each other, and were implemented in anticipation of some businesses struggling to pay back their loans on the original terms. Yet despite the additional flexibility offered by Pay As You Grow, the repayment of Bounce Back Loans is still proving a challenge for some businesses in the current climate.

Can I dissolve my company with an outstanding Bounce Back Loan?

In short NO as the Bank will object to this application. You can only close it through a formal process of liquidation, however its imperative you understand the whole process and the role of the Insolvency practitioner first before engaging them.  The Directors Helpline will assess everything before you decide that this is the right route for you.

I’m struggling to repay my Bounce Back loan – where can I find help?

If you’re struggling to repay your Bounce Back Loan, it’s important to understand that you’re not on your own. We’ve supported many businesses that were also struggling with Bounce Back Loan repayments. We understand how stressful the situation can be, and we want to help you through it. The best thing you can do is to speak to someone as soon as you can. When you get in touch with The Directors Helpline, we’ll help you understand the options that are available to you in your unique set of circumstances. We operate independently, with no obligation, and our experienced staff are available to chat with you 7 days a week. We’ll provide you with all the information you need to decide how you want to proceed, in a way that makes the most sense for both yourself and your company. Get in touch, and let’s work through this challenge together.

  • This field is for validation purposes and should be left unchanged.

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The Directors Helpline prides itself on helping where we can, and sometimes another solution could be the best option. Whatever it may be we are here to help you and your companies future.