The Bounce Back Loan Scheme was set up to help businesses financially impacted by the coronavirus pandemic, giving them funding and interest-free repayments for 12 months. However, trade levels have not returned as quickly as hoped and some companies are now struggling to meet their repayments. This article from Clarke Bell discusses what options are available for those struggling to pay their bounce back loan and explains what could happen if they continue to miss payments.
Getting expert advice is crucial. The sooner you speak to someone the more choices will be open to you. If you have not yet spoken to someone, or you are still unsure what your options are then we recommend that you get in touch with us today for a free no-obligation chat about what’s happening and how we can help.
Will I be personally liable for my bounce back loan?
If you used the loan money irresponsibly, for example to struggling to pay a CCJ pay for personal items or to inflate turnover to gain access to more money, then it may be that you will be held liable. However, if you have been through the Bounce Back Loan Scheme and can demonstrate that you did not use the money in this way, then you should be protected from being personally liable by your lender. If your company has been ordered to enter liquidation and you cannot repay the loan, you will need to contribute your own assets to the pot and can expect to face legal action.
Are you struggling to pay your bounce back loan?
If your business took out a bounce back loan, or is expected to start making repayments after the first anniversary of the loan (May 2021), and you are concerned that you will be unable to make these repayments, then it is important that you seek professional help and support immediately.
Depending on your situation you can take a number of different options to try and ease the pressure on your company. For instance, you can ask to restructure your loan or take a payment holiday. You can also opt to use the ‘Pay as you Grow’ measures, which allow you to repay your loan based on your company’s turnover rather than a fixed amount.
If you are still unable to pay the loan, even after attempting all of these options, then you should be aware that your company is likely to have crossed the insolvency threshold and you should seek professional advice immediately. This is to ensure that recovery action does not begin and that you can avoid being placed into liquidation. We can help you explore your options and find the most appropriate solution to fit your circumstances. These can include HMRC time to pay arrangements, BBL payment holidays and, in more severe cases, a full restructure of the company’s debts through a formal insolvency mechanism such as a Company Voluntary Arrangement or Administration. You can find out more about these mechanisms in our worried directors guide.