Bounce Back Loan (BBL) And Coronavirus Business Interruption Load (CBIL) Repayment Problems
If you are struggling to repay your BBLS or CBILS repayment, First Credit Advice Limited can provide you with solutions.
FINANCIAL SUPPORT FOR BUSINESSES DURING CORONAVIRUS (COVID-19) UNDER BBLS & CBILS SCHEMES
Small businesses contribute to local economies by bringing growth and innovation to the community in which the business is established. Small businesses also help stimulate economic growth by providing employment opportunities to people who may not be employable by larger corporations.
The Bounce Back Loan (BBL) and Coronavirus Business Interruption Loan (CBIL) schemes were among the full range of business support measures have been made available to UK small businesses during the pandemic spread over the financial year 2020-21 and provided £79.3 Billion to struggling UK businesses.
These loan schemes were characterised with generous payment holidays and affordable rate of interest along with various options to restructure the loan during its existence. However, the terms ‘government-backed’ has always created confusion among the borrowers.
Since the closure of these schemes and last disbursements during March 2021, the time has now come where repayments are coming into effect after one year payment holidays. Most of the businesses who took these loans at the beginning of theses schemes have already started the repayments after considering different options available to them which include, ‘pay as you grow’, ‘interest only for 18 months (6 month in one stretch)’, ‘prolonged repayment time (10 years maximum)’ etc.
However, we have come across large number of queries where the businesses are struggling to settle the debt under the current circumstances even after full utilization of all the relaxations/benefits these loan carry.
Hence, if you are undergoing the same situation of being worried about how you are going to meet the repayments, you are among thousands of businesses under the same situation.
YOUR BUSINESS LIABILITY
There was a lack of due diligence when the Government implemented the CBIL and BBL schemes. As a result, many ‘unviable’ companies have received loans.
If your company cannot pay back this loan, there should not be consequences if you have acted ‘reasonably and responsibly’ and utilized the loan ‘in the best interest of the company’.
AFFECT ON BUSINESS CREDIT HISTORY
Please keep in mind that these loans were granted to you against your business accounts and any delayed, missed or defaulted information against the same will appear into your credit report and the risk your credit rating deterioration is very likely. We all understand the importance of the robust credit history for a business which is likely to survive in long term and highly dependant on the banks for the working capital / cash flow requirements.
YOUR PERSONAL LIABILITY
A personal guarantee was required on CBILS loans over £250,000. Unfortunately, as a result, these directors are liable. Many thought that ‘government-backed’ meant Government protection. However, this is not the case for personally guaranteed loans.
To recover their money, lenders must demonstrate that they have exhausted all possible recovery channels. This includes options such as liquidation of companies, repossession of assets and even Bankruptcy.
For loans below the value of £250,000 personal guarantee was not required which leaves the director(s) becoming personally liable.
IF YOU ARE A SOLE TRADER
Unlike company Directors, you do not have the protection of a limited company. As a result, if you default, you are fully liable to repay your loan.
The lender cannot try to repossess your ‘principal private residence or primary personal vehicle’. This means that your home and main vehicle are safe. However, this does not mean your business and other assets are not at risk. Ultimately, your lender can also make you Bankrupt. This in turn puts assets like your home at risk.
Therefore, you should act quickly to reduce the impact of defaulting on your loan.
Cases involving CBILS and BBLS can be complicated, especially when factoring in other liabilities. Often defaulting on one loan can have a landslide effect. This can result in requests to pay back other debts, potentially leaving you in a tricky situation.
If you cannot pay, it is vital that you act urgently. Delaying will only make the situation worse and can have serious consequences for you and your company.
We recommend consulting with debt advise agencies / insolvency experts to get an accurate understanding of your situation and your options.
For your reference we have attached a model of pre / post arrear, defaults and recovery guidance for all the businesses.
HOW WE CAN HELP
We provide debt advising and adjusting services to the business which are under debt problems. We can suggest the debt solution which is most appropriate to their situation. We can represent these businesses for debt adjusting services and can also recommend to insolvency practitioner if required under the circumstances.
We feel pleasure in helping small business getting out of the debt and becoming an element of generating the economic activity.
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