Can't Pay Back Bounce Back Loan

Are You Struggling To Pay Back Your Bounce Back Loan?

Bounce Back Loans were loans that were first introduced by the Government, amid the Coronavirus pandemic to help businesses of all different sizes gain access to fast track, emergency finance. Business owners were able to borrow between £2,000 and £50,000.

The loan was eligible to be used for things like paying staff wages, including those of the directors and it can also be used to help with rents, business rates and monthly business costs or overheads. Directors are also able to use it to refinance other business debts to lower any interest costs incurred. Bounce Back Loans were interest free for the first 12 months and are 100% Government backed guarantee for lenders. 

What You Should Do If You Know You Can’t Pay Back Your Bounce Back Loan

CP Law Associates advice to business owners would be to make sure that the Bounce Back Loan is not run down, until there is nothing left, especially in instances where you need to pay creditors, your employers wages or for the cost of liquidation. We of course, do not believe that all business owners would do this, but there are a number of businesses that have taken out these loans when paying back is non-viable.

As a business, if you are now unable to pay back the bounce back emergency loan, it is not too much of a problem as long as in obtaining the loan, you have acted reasonably and responsibly as a company director, but it is worth noting that your credit rating may be affected and because of this obtaining future loans could become a problem, as time goes by, if you are unable to pay your liabilities you will become insolvent.

How Can I Claim I Acted ‘Reasonably and Responsibly’

If you used the bounce back loan to repay yourself any loans that you introduced, or to pay dividends or drawings when the company cannot pay its normal suppliers or creditors then this becomes ‘preference’ and is against the law set out in the Insolvency Act 1986.

What Action Can I Take if I Can’t Pay Back The Bounce Back Loan?

The Chancellor Rishi Sunak, extended the flexibility of the loan which will now be available to all from their first repayment, rather than after six repayments have been made, giving businesses the option to make no payments on their loans until 18 months after originally taking them out. Businesses first began to receive their loans in May 2020 with the first payments due back in May 2021.

If you have the inability to pay the Bounce Back Loan back at all, it could be due to it being symptomatic of deeper financial business problems with other loans or creditors building up – if this is the case we suggest you speak with an insolvency lawyer to look at the options that you may have.

How CP Law Associates Can Help You

If you have taken out a Bounce Back Loan for your business and you are unable to pay it back, we suggest contacting our insolvency lawyers, who can provide you with a free initial consultation. Call one of our expert advisers today if you would like to talk about your business debts and the options available to you.

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