The UK Government has introduced the Bounce Back Loan Scheme, also known as BBL to offer the financial support to small-sized businesses that are struggling with cash flow. It appeared that the program let businesses borrow up PS50,000 without interest and no repayments during the initial year, could be an aid to struggling businesses. However, as time progressed, concerns have been raised about the repayment of unused Bounce Back Loans. In many cases, companies are unable to pay back their loans. This results in an rise in debt restructuring, or the voluntary liquidation of creditors.
This is a question that many directors and business owners are asking themselves. Will banks and creditors require businesses to repay these loans, or even write off bounce back loans? Many business owners and directors are asking this question. They are in a bind due to overdrawn directors’ loan accounts.
The loophole of bounce-back loans
There are some reports that there exists a “loophole” for bounce-back loans, which would permit businesses to avoid repaying their loans. This loophole is based on the fact that the BBLs are technically government-guaranteed loans. The government is liable for the repayment of the loan in case the business does not pay.
This is still an unproven theory. It’s not guaranteed that the government will be able to write off bounce-back loans even if they’re defaulted by businesses.
What happens when you are not able to pay back the bounceback loan?
If you are unable to repay your bounce back loan, there are a few options available to you.
You could try to restructure your debt. Negotiating with your lender could be a way of negotiating a smaller payment amount or a longer repayment time.
You may choose to opt for the voluntary liquidation of creditors. This is a formal process that allows businesses to shut up their business and pay their creditors.
Your loan could be repaid in full. This could result in severe consequences like the damage to your credit score and possible legal actions.
How do you handle bounced back loans
Get advice from a professional when you’re struggling to pay back the bounceback loan. Financial advisors can help assess your options and create plans to pay off your debt.
It is also crucial to remember that you are not the only one. Numerous businesses are in the same situation as you. The government has created a range of support schemes for businesses who struggle to repay their bounce-back loans.
Do not be afraid to reach out for assistance when you’re struggling with paying back your bounceback loan. There are a variety of people who can help you get back to normal.
In times of financial stress and insolvency, experts like Company Doctor specialize in helping companies navigate the complicated liquidation process. They are specialists in more than just traditional methods of insolvency, and offer advice on other viable options, such as voluntary and debt restructuring. Insolvency professionals have the expertise and experience to analyze the financial condition of a company, assess its viability, and recommend suitable options. By working closely with businesses, they can provide tailored guidance and support, ensuring an efficient transition during the liquidation process.
As the impact of the epidemic continues to impact businesses, the future of Bounce Back Loans remains uncertain. Although businesses are faced with challenges repaying these loans, it is essential to take the issue seriously and seek out professional guidance from experts on debt restructuring and insolvency. If you attempt to find ways to avoid repayment, it can have severe consequences.