The Bounce Back Loan Scheme (BBL) was launched by the UK government to provide needed financial assistance to small-scale businesses struggling with cash flow issues. It seemed that the scheme that allowed businesses to get a loan of PS50,000 with no interest and with no repayments in the first year, proved to be a lifeline to struggling companies. However, as time gone by, questions have emerged regarding the repayment of outstanding Bounce Back Loans. As a result, numerous companies are in a position where they’re unable to pay their loans. Debt restructuring is not uncommon and creditors are likely to contemplate liquidation by voluntary.

It’s not clear what will happen to these loans – do banks and creditors expect the business to repay them and if so, will bounceback loans be canceled by the bank? This question was on the minds of many business owners and directors who are now in a precarious position due to director loan accounts that are overdrawn and personal assurances.

The loophole in the bounce back loan

There is some speculation that there could be the possibility of a “bounce back loan loophole” which would permit companies to defer repayment of their loans. This loophole is based on the fact that the BBLs are technically government-guaranteed loans. The government is liable for repayment in the event that a business is in default.

It is important to note that at this time this is only a speculation. Even if a firm defaults in bounce back loans the government isn’t required to take them off.

What happens if you are 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 is an alternative. This could involve negotiations with your lender to agree on a lower rate of repayment or a longer time frame for repayment.

You can opt for creditors’ voluntary Liquidation. This is a formal procedure which allows businesses to wind up their affairs and pay back debtors.

Your loan could be repaid in total. However, this can have grave consequences, including damage to your credit rating and the potential for legal actions.

The best method to handle your bounce back loan

It is recommended to seek advice from a professional when you’re struggling to pay back your bounceback loan. Financial advisors can help you evaluate your options and devise a strategy to manage your debt.

It is also crucial to remember that you are not alone. Many other businesses are in the same situation as you. The government has set up several strategies to help companies that are struggling to repay bounceback loans.

Don’t hesitate to ask for assistance If you’re struggling with your bounce-back loan. It is possible to seek help to bring your life back to the right track.

Experts such as Company Doctor are experts at helping businesses navigate the complicated liquidation process when they are in financial stress. They are specialists in more than traditional insolvency processes, and are able to provide advice on alternative solutions, such as voluntary agreements and restructuring debt. Insolvency practitioners have the knowledge and experience to examine the financial condition of a business, determine its viability, and suggest suitable options. In close collaboration with businesses, they are able provide specific advice and make sure that liquidation runs as a smooth process.

Bounce Back Loans’ future is not certain, given that the pandemic has continued to affect businesses. Even though businesses may face difficulty repaying these loans, it’s important to seek out professional advice and debt restructuring from insolvency and debt restructuring experts. The consequences of attempting to exploit loopholes and evade obligations to pay are serious.