Bounce Back Loan

Bounce Back Loan. What if you can’t repay?

If you’re a company director or sole trader with concerns over your Bounce Back Loan repayments, you should take advice as soon as possible. The earlier you get a professional involved, the more options you’ll have.

During the lifetime of the Bounce Back Loan Scheme, 1.5m businesses opted to take a BBL, with 58% of them opting for the maximum £50,000 loan, according to a recent National Audit Office report. In total, £47 billion was lent under the BBL scheme.

But despite recent government support, slow economic recovery and a lack of confidence in both consumers and businesses means that repaying your Bounce Back Loan might be too much pressure. If it is, you should seriously consider taking advice from a regulated professional.

After talking through your options, you might decide that a formal insolvency process is the best answer for your business. This doesn’t always mean the end. If your business would be viable without its Bounce Back Loan debts, you may be able to consider a restart using a Start Afresh Liquidation.

Does a licensed insolvency practitioner need to investigate the reasons for failure of a company?

In the case of an insolvent company, the liquidator (who must be a licensed insolvency practitioner) is legally bound to review the activities of the company and decide if one or more of the directors is responsible for its failure.

The pandemic took us into new territory as licensed insolvency practitioners. Supporting business owners who are forced to close their company through no fault of their own is surprisingly common. But multiple businesses facing the same issue at the same time is unprecedented.

As insolvency practitioners, we have needed to apply insolvency law and guidance to a set of circumstances that definitely weren’t foreseen at the time the guidance was prepared.

A mixture of knowledge, experience and common sense has had to be applied to each individual company situation to make a distinction between directors who have acted dishonestly and those who have been simply unfortunate and now can’t repay a Bounce Back Loan.

Thankfully, the vast majority of Bounce Back Loans were used for the designed purpose. And a huge number of businesses were able to survive as a consequence of this Government support. However, for many those funds have run out before the business’ marketplace has sufficiently revived. This has led to many needing to discuss options with a professional, safe in the knowledge they have not used the funds fraudulently or incorrectly.

Is striking a company off at Companies House an alternative to liquidation?

If you appropriately notify those owed money by the company, and if the strike off is not objected to, a limited company with debts could be struck off from Companies House.

We’ve been told that attempts to strike companies off that have an outstanding Bounce Back Loan have been blocked by the BBL providers. This seems to be consistent with the experience of others in the business rescue and insolvency sector.

Even if you do “get away” with a strike off, thanks to enhanced powers granted to the Insolvency Service in the wake of the pandemic, it’s now able to reinstate companies to the register so they can be investigated and dishonest directors prosecuted.

Need to speak to someone?

If you took out a Bounce Back Loan and you are struggling with the repayments, then it’s vital that you seek expert advice. Our licensed insolvency practitioners will be able to assess your situation and advise accordingly. All the possibilities must be duly considered and any likely consequences for directors discussed. These will of course depend on your individual circumstances.

For further advice on Bounce Back Loan repayments, please call our expert team on 0800 054 6590

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