The UK government introduced the Bounce Back Loan Scheme (BBLS) in response to the COVID-19 pandemic to provide financial support to small and medium-sized businesses. However, as the loan repayment deadline approaches, many businesses are finding themselves in a difficult financial situation and are unable to repay their loans. In this blog post, we will discuss some key questions around the repayment of BBLS loans and what options are available to businesses that can’t repay their loans.
Are sole traders personally liable for Bounce Back Loans?
Yes, sole traders are personally liable for the repayment of Bounce Back Loans. The loan is unsecured, which means that there is no collateral against the loan, and the lender has no legal right to seize any assets in the event of default. As a result, sole traders are fully responsible for repaying the debt, and their personal assets, including their home, may be at risk if they are unable to repay the loan.
Bounce Back Loan Repayments
Bounce Back Loans are expected to be repaid over a period of 6 years, with the first repayments due in May 2022. However, if a business is unable to repay the loan, they can apply for a repayment holiday of up to 6 months. After the repayment holiday, the loan must be repaid in full, with interest accruing during the holiday period.
Bounce Back Loan Repayments Solution
If a business is struggling to repay its Bounce Back Loan, there are several options available, including:
- Repayment holiday: As mentioned earlier, businesses can apply for a repayment holiday of up to 6 months if they are unable to repay their loan. However, this will result in higher repayments once the holiday period ends, as interest will continue to accrue.
- Debt consolidation: A debt consolidation loan allows a business to consolidate its debts into one loan with a lower interest rate, making repayments more manageable.
- Refinancing: Refinancing involves taking out a new loan to repay an existing loan. This may be a good option for businesses that have improved their financial situation since taking out the Bounce Back Loan.
- Write-off: In extreme cases, a Bounce Back Loan may be written off if a business is unable to repay the loan and there is no realistic prospect of repayment.
Can I defer payments on my Bounce Back Loan?
Yes, businesses can apply for a repayment holiday of up to 6 months if they are unable to repay their Bounce Back Loan. However, this will result in higher repayments once the holiday period ends, as interest will continue to accrue during the repayment holiday.
Do you have to pay back the business Bounce Back Loan?
Yes, businesses are required to repay their Bounce Back Loans, including interest, over a period of 6 years. If a business is unable to repay the loan, it may be subject to legal action, and the owners’ personal assets may be at risk.
Acme Credit Consultant will help you
If you are struggling to repay your Bounce Back Loan, Acme Credit Consultant can help. Our experienced team of financial experts will work with you to find the best solution for your business, whether it’s a repayment holiday, debt consolidation, refinancing, or a write-off. We understand that this is a difficult time for businesses, and we are here to help you find the best solution for your specific circumstances.