What can you do if you’re struggling to pay back your bounce-back loan / CBILS?

As the economy starts to open up again, many businesses are still experiencing financial distress and finding it difficult to meet their ongoing liabilities. If your business has missed a Bounce Back Loan or CBILS payment or is about to do so, what are the implications for yourself and your business? Banks and lenders have been told to be sympathetic to small businesses that start to miss payments, but ultimately they will still need to follow standard recovery procedures. So while they may be sympathetic, it’s important to take action.

Bounce Back Loans and CBILS came with many benefits, one of which was that the UK Government provided security to lending banks. Another was that as the loans were under £250,000, they didn’t require any personal guarantee. This means the business owners themselves aren’t at any personal risk if the business misses a repayment or defaults on the bounce back or CBILS loan. However, there are potential longer-term implications, as legal liability remains with the borrowing businesses (not the person) throughout unless the company enters liquidation. There have been numerous cases in the media about  Company Director’s being held personally responsible, but it is important to note that this is only the case if it is proved by the courts that there has been Bounce Back Loan misuse or fraud.

If you are experiencing short-term or long-term financial difficulty and cannot repay your CBILS or Bounce Back Loan, you may wonder what your options are. This can be a difficult time, but there are options to help ensure that your business gets back on track as soon as possible.

1. If possible, repay your loans. If you have just missed a CBILS or missed a single Bounce Back Loan payment, for example, he first thing to do (if you are able) is to pay the missed payment as soon as possible.

2. Seek professional help. If repaying your loans is not possible, or you feel as though you are in danger of not being able to pay an upcoming repayment, it is important to seek professional help as soon as possible. It doesn’t mean that all hope is lost, but it does mean that, as a liquidator, we can look at your finances and provide some insight and potential solutions based on your situation. This can vary from simply reducing costs and outgoings to formal restructuring and business rescue measures. While one missed or late payment isn’t the end of the world, it is important to be mindful that any missed payment to a lender can be seen as a sign of more serious underlying problems. This is why the first step should always be to seek a professional assessment of your business’s health and overall stability if you are in difficulty, we may be able to help you avoid liquidation.

3. Liquidation. If you have missed multiple payments and are experiencing difficulties, liquidation may be the next sensible step. If this is the case, it's important not to waste any time and obtain professional advice from an experienced insolvency practitioner before making any firm decisions. We can discuss the situation with you and look deeper into your financial situation and can tell you whether liquidation is likely if you continue missing payments and if it isn't (as it isn’t always as bad as people think). A Time To Pay (Time To Pay) agreement can sometimes be negotiated, and sometimes a Creditors Voluntary Arrangement (CVA) can help provide some much-needed breathing space to consolidate your debts into a legally binding payment plan. We can advise you on the right course of action for your business to take.

If your business is still viable but unable to repay a loan, then we strongly encourage you to take action to improve cash flow and seek professional help.

Speak with David Stephens our bounce back loan expert. Contact us here: https://www.frostgroup.co.uk/contact

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