Trouble paying back your Bounce Back Loan?
Mr Bankruptcy
23rd June 2022
Once seen as a lifeline for many businesses, a Bounce Back Loan may now feel more like a heavy burden if you are struggling to repay one. If that’s the case, what might your options be. And what happens if the Bounce Back Loan isn’t the only debt you can’t repay?
What are Bounce Back loans?
Bounce Back Loans were introduced in March 2020 as a response to the impact the Covid-19 pandemic was having on business. To help businesses to survive through these challenging times the Bounce Back Loan allowed them to borrow up to £50k, to be paid back monthly but with no repayment for the first 12 months.
Directors of limited companies could take out these loans without needing to act as personal guarantor because the government would take on the risk and repay loans if businesses became insolvent, so long as the loan had been used in accordance with the terms of the loan.
What happens if a business can’t repay its Bounce Back Loan?
Although many businesses took out Bounce Back Loans in good faith, no one knew how long lockdown would last or, when restrictions were eventually lifted, that there would be a gradual return to “normal”. Trade was slow to regain momentum and bounce back for many businesses.
As a result, some businesses are now struggling to repay their loans. In this situation, there are a couple of options provided by the Pay as Your Grow scheme, specifically introduced to help with this problem. It allows business to:
- Delay the start of repayments for up to six 6 months,
- Lengthen the term of the Bounce Back Loans from six years to ten,
- Make interest-only repayments for 6 months.
These are good options when it’s only the Bounce Back Loan causing financial stress, but the reality for many companies is that they have other loans and debts which now hang like a weight around their necks.
Is your business struggling with more than a Bounce Back Loan?
In reality, many businesses are struggling to repay more than just the Bounce Back Loan as they work hard to get back onto a stronger financial footing and in the face of emerging economic challenges, including continuing rising costs.
Options
If this is the case for your business, you need to consider more options than the Pay as You Grow Scheme. It may be time to consider alternative formal or informal debt restructuring options such as a Company Voluntary Arrangement (CVA) to renegotiate loan repayments. If you own money to HMRC, a Time To Pay arrangement could be another option.
If the long-term viability of your business is in doubt, it may be necessary to commence formal liquidation proceedings, in which case your Bounce Back Loan will be treated the same as any other debt.
Is it time to ask for help?
If you need support managing your business debts and want to understand the options available to you, don’t leave it too late, letting debt concerns begin to affect your physical and mental wellbeing as well. There may be more options available to you than you realise, and this isn’t a problem you need to face alone.
James Rosa Associates
James Rosa associates is a firm of debt advisors and debt adjustors. With a supportive and friendly approach, we offer a full range of advice and professional services to individuals and business owners/directors facing unmanageable debt or who are involved in civil or commercial disputes. Our services include:
We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.
Find out if you qualify for a free consultation
If you want to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk to find out whether you qualify for a free consultation.
Please be advised that all views expressed in these posts are those of the author and not of James Rosa Associates ltd.