The UK government launched the Bounce Back Loan Scheme to help small companies struggling with cash flow problems. It seemed that the scheme that allowed businesses to get a loan of PS50,000 with no interest and without any repayments during the initial period, served as an emergency aid for struggling businesses. But as time has passed, concerns have arisen about the repayment of outstanding Bounce Back Loans. Many times, businesses have difficulty paying back their outstanding debts. This leads to an rise in debt restructuring, or voluntary liquidation of creditors.
The long-term future of these loans remains uncertain – will banks and creditors expect companies to pay them back, or will bounce-back loans be wiped off? The question has been on the minds of many directors and business owners who now find themselves in a tough spot with the director’s loan accounts overdrawn and personal guarantee. For more information, click bounce back loan
The bounce back loan loophole
There are some rumors that there’s a “loophole” that allows bounce-back loans that would allow companies to avoid paying back their loans. This loophole is based on the fact that the BBLs are technically government-guaranteed loans. If a company fails to pay an unsecured loan, then the government will be responsible for repaying the lender.
This is still speculation. There is no assurance that the government will actually cancel bounce back loans even if businesses fail on them.
What happens if you are unable to repay your bounce back loan?
If you’re not able to repay your bounce-back loan, there are some options available to you.
Restructuring your debt can be an option. Talking with your lender may mean agreeing to a smaller total amount of repayment or a longer time.
You can dissolve your creditors in a voluntary manner. This is a formal process which allows businesses to liquidate their businesses and pay debtors.
You could simply default on the loan. This could have severe consequences like damage on your credit score, and possibly legal action.
How do you deal with bounced back loans
It is recommended to seek advice from a professional should you be having problems paying back the bounceback loan. A financial advisor can assist you assess your options and develop a plan to deal with your debt.
You’re not alone. Many other businesses are also experiencing the same issues similar to you. The government has put in place a variety of assistance programs for companies that struggle to repay the bounce-back loan.
If you’re having trouble with your bounce-back loan, do not hesitate to seek help. There are many who can help you with getting back on track.
Professionals like Company Doctor are experts at helping businesses navigate the difficult liquidation process during times of financial stress. Their knowledge extends far beyond traditional insolvency proceedings, and they can provide valuable information on debt restructuring agreements, voluntary arrangements, and other viable solutions. Insolvency professionals have the experience and know-how to analyze the financial situation of a business and assess its viability and recommend the best course of action. By working closely with companies they are able provide tailored advice, and ensure that the liquidation is smooth and easy.
Bounce Back Loans’ future remains uncertain, since the virus continues to affect businesses. While businesses face challenges in repaying these loans, it’s essential to approach the situation responsibly and seek out professional guidance from experts in the field of debt restructuring and insolvency. If you are trying to find ways to avoid repayment there could be serious consequences.