The UK Government has introduced the Bounce Back Loan Scheme, also known as BBL, to provide financial aid to small-scale businesses that are struggling with cash flow. This scheme allowed businesses that qualify to borrow up to PS50,000 interest-free for 12 months. However, as time gone by, questions have emerged regarding the repayment of outstanding Bounce Back Loans. In many cases, companies cannot pay their outstanding debts. This can lead to an increase in debt restructuring or the voluntary liquidation of creditors.
It’s unclear what’s going to be the outcome of these loans – will creditors and banks expect businesses to pay them back and if so, will bounceback loans be canceled by the bank? Many directors and business owners have been asking themselves the same question, as they are in a difficult situation due to the director loans account that is overdrawn as well as personal guarantees.
The loan loophole for bounce-back
Some speculate that there might be a “loophole for bounce back loans” which could allow companies to avoid repayment of their loans. This loophole is based on the fact that the BBLs are technically government-guaranteed loans. If a company fails to pay an unsecured loan, then the government has to be accountable for repaying the lender.
It’s still an unproven theory. If a company defaults on bounce back loans, the government has no obligation to take them off.
What happens if I can’t pay back my bounce-back credit?
If you are unable to repay your bounce back loan, there are a few options available to you.
You may be able to negotiate a restructuring of the debt. The process of negotiating with your lender might be a way of negotiating a smaller payment amount or a longer repayment period.
You can dissolve your creditors in a voluntary manner. This process permits businesses to close down and pay their debtors.
You can simply default on the loan. However, this could have grave consequences, including an impact on your credit rating and the potential for legal action.
How to deal with bounced back loans
You should seek professional advice when you’re struggling to pay back the bounceback loan. A financial advisor will guide you through the options available to you, and then develop a strategy to manage your debt.
You’re not the sole one facing this dilemma. Many businesses are in the same position as you. The government has implemented numerous schemes to assist businesses struggling to repay bounce back loans.
Don’t be afraid to ask for help if you’re having trouble with your bounce-back loan. There are many people who can help you in getting back to normal.
Professionals like Company Doctor are experts at helping businesses navigate the complicated liquidation process during times of financial crisis. They’re experts of more than conventional insolvency procedures, and can offer advice on other viable options, including voluntary agreements and restructuring debt. Insolvency professionals have the expertise and experience to assess the financial position of a business, determine the viability of its business, and suggest appropriate courses of action. By working closely with companies they are able provide tailored advice, and ensure that the liquidation is an efficient process.
Bounce Back Loans’ future is uncertain as the pandemic has continued to impact businesses. While businesses might face difficulties repaying these loans it is essential to seek advice from a professional and restructuring debt from insolvency and debt restructuring experts. Making use of loopholes to escape repayment obligations can cause serious consequences.