The UK government has introduced the Bounce Back Loan Scheme to help small companies struggling with cash flow issues. It appeared that the scheme that allowed businesses to get a loan of PS50,000 with no interest and no repayments during the initial year, could be an emergency aid for struggling businesses. As time has gone by, questions have emerged in relation to the repayment of outstanding Bounce Back Loans. In the end, numerous companies are in a position where they are unable to repay their loans. Debt restructuring is not uncommon and creditors may consider voluntary liquidation.
The future of these loans is uncertain – will banks and creditors expect companies to pay them back or will bounce-back loans be wiped out? Many business owners and directors are looking into this matter. They are in a difficult position due to their overdrawn director’s loans accounts.
The loophole in bounce back loans
There are rumors that there’s a “loophole” for bounce-back loans, which would permit firms to avoid having to pay back their loans. This loophole is based on the fact that the BBLs are technically government-guaranteed loans. That means if a business defaults on its loan then the government is responsible for the repayment of the lender.
It’s still an unproven theory. If a company defaults on bounce back loans the government is not obligated to take them off.
What happens if you don’t pay back your bounce back loan?
If you are unable to repay your bounce back loan, there are a few options available to you.
Restructuring your debt could be an option. This could involve negotiations with your lender to agree to a lower cost of repayment or a greater term for repayment.
It is possible to choose the voluntary liquidation of creditors. This process permits businesses to shut down and pay their creditors.
You may be able to simply be in default on your loan. It could result in serious penalties, such as a blemish on your credit score and legal actions.
How to handle bounced-back loans
Consult a professional when you’re struggling to pay back the bounceback loan. Financial advisors can help you to assess your options and come up with a plan to deal with your debt.
You’re not the sole person in this scenario. You’re not alone. The government has set up various support programs to aid businesses struggling to repay their bounce back loans.
Please do not hesitate to contact us for help if you are having difficulty repaying your bounceback loan. There are many people that can help you getting back on track.
Company Doctor is a professional who assists businesses in challenging financial situations and liquidation. They are specialists in more than traditional insolvency procedures, and can provide advice on alternative solutions, like voluntary and debt restructuring. Insolvency experts have the understanding and expertise to evaluate the financial condition of a business, determine the viability of its business, and suggest suitable options. They can provide customized advice and assistance companies to facilitate a smooth transition throughout the process of liquidation.
The future of Bounce Back Loans is uncertain because the impact of the pandemic continues to negatively impact businesses. Though businesses may encounter difficulties paying back these loans, it is important to seek out professional advice and help with debt restructuring from bankruptcy and debt restructuring experts. In the event of trying to take advantage of loopholes or evade repayment obligations can be a serious risk.