Unable to repay your bounce back loan?
Many businesses borrowed up to £50,000 under the Bounce Back Loan Scheme (BBLS), but as post-Covid-19 trade remains challenging it’s clear that many companies are struggling to repay this loan alongside their other financial commitments.
When Bounce Back Loans were launched, they came with the reassurance that company directors would not be bound by a personal guarantee and the government would provide 100 per cent security to participating lenders.
If you can’t afford to repay it and your company becomes insolvent, the responsibility to repay the loan will fall on the government.
However, if you’ve breached the terms and conditions of the Bounce Back Loan and misused the funds, company directors could be held personally liable.
The loan should have been used to provide an ‘economic benefit’, such as paying staff wages, purchasing new stock, and maintaining company cash flow.
If it was spent on any other purpose - such as enhanced personal use or benefit - personal liability could come into play.
The government is already looking at new legislation that grants powers to launch an investigation into director conduct where company strike off is pursued to escape an outstanding Bounce Back Loan.
If you are also struggling to maintain your VAT, PAYE or Corporation Tax bill, a Time to Pay (TTP) arrangement can grant additional time to make payments, typically over 12 months.
We’re certainly seeing more company directors across Lancashire talking to our team in Preston about Liquidations, Administrations and Company Voluntary Arrangements (CVA) as the pressure continues to mount up over this growing Bounce Back Loan repayment issue.
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