The UK Government introduced the Bounce Back Loan Scheme, or BBL which provides financial aid to small-scale businesses struggling with cash flow. With the scheme allowing eligible businesses to borrow as much as PS50,000 in a non-interest way and with no repayments for the initial 12 months, it appeared like a lifeline for struggling companies. However, as time went by there were worries about the repayment of Bounce Back Loans. In many cases, companies are not able to repay their debts. This causes an increase in debt restructuring or voluntary liquidation of creditors.
It’s unclear what will happen to these loans – will creditors and banks expect that businesses repay them or will the bounceback loan be written off by the bank? The question has been on the minds of numerous directors and business owners who now find themselves in a precarious position due to loans for directors that are insufficiently credited and personal guarantees.
The loan loophole for bounce-back
There is speculation that there might be some kind of “bounce back loophole in loans” which could permit businesses to pay off their loans. This loophole is based on the fact that the BBLs are technically government-guaranteed loans. If a business defaults on loans, then the government has to be accountable for repaying the lender.
It’s just speculation. It is not guaranteed that the government will be able to write off bounce-back loans, regardless of whether they’re in default by business.
What happens if I’m unable to pay back the bounce-back loan?
If you are unable to repay your bounce back loan, there are a few options available to you.
Restructuring your debt can be an option. This could require negotiations with your lender to agree to a reduced repayment amount or a longer term for repayment.
You can opt for voluntary liquidation for creditors. This is a formal procedure that allows businesses to wind down their affairs and repay their creditors.
You can simply default on the loan. This could cause grave consequences, including a negative impact on your credit score, and possibly legal actions.
What’s the best way to deal your bounce-back loan?
It is crucial to get help from a professional when you have trouble repaying the bounce-back loan. A financial advisor can assist you determine your options and create a plan to deal with your debt.
You’re not the sole person in this scenario. Many businesses are in the same circumstance as you. The government has put in place a variety of aid programs for businesses that struggle to repay their bounce-back loans.
If you’re struggling with your bounce-back loan, don’t be reluctant to seek assistance. You can get help to get your life back on the right track.
In times of financial distress and insolvency, experts like Company Doctor specialize in helping businesses navigate the complex liquidation process. They are specialists in more than the traditional insolvency processes, and are able to provide suggestions on other viable options, including debt restructuring and voluntary arrangements. Insolvency experts have the skills and knowledge to assess the financial condition of a business, determine its viability and make the appropriate recommendations. Working closely with businesses they can offer tailored advice and assistance, ensuring an efficient transition during the liquidation process.
Bounce Back Loans’ future remains uncertain, since the ailment continues to strike businesses. Businesses face difficulties in repaying these loans, it is crucial to approach the situation responsibly and seek the advice of experts in debt restructuring and insolvency. Making use of loopholes to avoid repayment obligations could lead to severe consequences.
