Bouncing back or struggling to repay Government loans?

February 4, 2022
|In Press Releases
|By Chris Brooksbank

Government loan schemes proved a vital lifeline for some businesses earlier in the pandemic but what happens if you can’t afford the repayments?

As with most things, it’s vital to take professional advice as soon as possible, rather than simply hoping for the best.

Although there are signs of economic recovery, some businesses are still reporting challenging trading conditions. As a result, reduced cash-flow means they are now  struggling to repay Corona Business Interruption Loans (CBILs) and Bounce Back Loans (BBLs)*

Some sectors – including hospitality, leisure and tourism – are still seeing activity below pre-Covid levels.  Others are struggling with new challenges including labour shortages, the energy crisis and sharp increases in costs of raw materials.

Both BBLs and CBILs involved commercial banks distributing funds, with the Government acting as the guarantor. Their respective terms and conditions are different though. Please make sure you read your agreement carefully and act now if you’re unable to meet instalments.

Firstly, if a company can’t repay a Bounce Back Loan it may be a sign of insolvency. Speak to us as soon as practical so we can explore whether you can restructure and recover.

Secondly, there may be opportunities to make interest-only payments, for a limited time, or extend the term of the loan.

If the company is not viable and liquidation is the only option, a Bounce Back Loan and other company debts will likely be written off.  The situation is not so clear-cut with CBILs, due to personal liability issues.

If the loan was for over £250,000, lenders were able to request personal guarantees. However, these were limited in terms of what could be recovered from company directors. Directors’ liability is capped at 20 percent of the debt.

Keen to learn more about the best way forward? Please contact us for free,  no obligation advice if you can’t pay either of these loans or anticipate problems in the near future:

Contact – CB Business Recovery (cb-br.co.uk)