The UK Government introduced the Bounce Back Loan Scheme, also known as BBL, to provide financial assistance to small businesses struggling with cash flow. It appeared that the scheme, which allowed businesses to obtain a loan up to PS50,000 at no cost and no repayments during the initial year, could be a lifeline to struggling companies. As time passed, however, there were concerns about the payment of Bounce Back Loans. In many instances, companies are unable to pay back their debts. This leads to an rise in debt restructuring, or the voluntary liquidation of creditors.
It’s not clear what will occur to these loans. will creditors and banks expect businesses to pay them back, or will bounceback loans be written off by the bank? A lot of business owners and directors are looking into this matter. They are trapped in a precarious situation due to overdrawn directors’ loan accounts.
The bounce back loophole
There are some reports that there’s a “loophole” that allows bounce-back loans, which would permit businesses to avoid repaying their loans. This loophole is based on the fact that the BBLs are technically government-guaranteed loans. The government is responsible for repayment if the business fails to pay.
But it is important to note that this is just speculation at the moment. It is not guaranteed that the government will take away bounce-back loans, even if they’re subsequently defaulted by business.
What happens if not able to pay back the bounceback loan?
If you are unable to repay your bounce back loan, there are a few options available to you.
You can try to negotiate a restructuring of your debt. You could negotiate with your lender for a lower payment amount or a longer period of repayment.
It is possible to choose creditors’ voluntary liquidation. It is a formal process that permits businesses to wind down their businesses and repay their creditors.
You can simply default on the loan. You could face severe consequences such as damage to your credit score and legal actions.
What is the best way to deal your bounce-back loan?
It is imperative to seek professional help if you are having difficulty repaying your bounce-back loan. Financial advisors can help assess your options and create a plan for dealing with your debt.
Remember that you’re not alone. Many companies are in the exact situation as you. The government has put in place various plans to help businesses who are struggling to pay back bounce back loans.
If you are struggling with your bounce back loan, please do not be afraid to ask for help. It is possible to seek help to help you get back on track.
Professionals like Company Doctor are experts at helping businesses through the complicated liquidation procedure in times of financial hardship. They can provide helpful advice regarding voluntary agreements, debt restructuring, and other viable options. Insolvency experts have the skills and experience to evaluate the financial condition of a business, determine its viability and offer appropriate recommendations. By working closely with businesses, they can provide tailored guidance and assistance, assuring a smooth transition through the liquidation process.
Bounce Back Loans’ future remains uncertain, since the virus continues to impact businesses. Although businesses are faced with challenges the repayment of these loans, it is essential to handle the situation with caution and seek out professional guidance from experts in the field of debt restructuring and insolvency. The consequences of trying to evade the obligation to repay are grave.