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Home | Bounce Back Loans

What happens if I can't pay my bounce back loan?

Are you struggling to pay back your bounce back loan as a sole trader or limited company? You’re not alone. Businesses across the UK are now being required to make repayments. We’ve helped 100’s of Directors and Business Owners to find the best solution. If you owe £15k or more, find out what your options are by calling us today.

Need help?

Call us

Call us on 0808 164 4909 today
or use our Live Chat below

Frequently asked questions

We’re here to help and can guide you through your options when you call,
but here are answers to some Frequently Asked Questions:

What happens if I can't pay back a bounce back loan?

It is the responsibility of the business to pay back the bounce back loan once monthly repayments begin, following the initial 12-month grace period.

Technically, there are no grave repercussions if you default on your bounce back loan. You won’t lose any assets, and it will not directly affect your credit score either. In the first place, credit checks are not mandatory for application to the loan scheme.

However, some banks do say that they will take defaults in consideration for standard loan applications in the future. Bank lenders are also instructed by the government to recover loan payments following standard procedure. They also reiterate that they’ve been clear about these loans being repayable and not just grants that can be written off if SMEs refuse to pay. Furthermore, bank lenders are still the ones to make the final decision with regards to the approval of the loan.

Banks will chase for unpaid bounceback loans in much the same way as they would try and recoup any other unsecured loan. This could involve dealing with debt collection agencies, court action and potentially bailiffs.

The Government and the banks have talked about establishing a panel of debt collection agencies that would all follow an agreed code of practice. This is because lenders can only claim on the Government 100-per-cent guarantee once a debt collection agency has exhausted chasing repayment.

The sooner you pay off your loan once interest is charged, which you can do without a penalty charge, the less it will cost you overall. Call us to find out what your options are.

Am I personally liable for a bounce back loan?

If the company becomes insolvent and subsequently enters a formal insolvency procedure, such as Creditors’ Voluntary Liquidation, then responsibility for repaying the Bounce Back Loan will remain solely with the company and liability cannot and will not be transferred to directors or other shareholders provided they comply with their statutory and fiduciary duties as a director. This means there is no risk to a director’s personal assets or individual credit rating should their company not be in a position to repay the loan.

Is a bounce back loan a personal loan?

If the bounceback loan was taken out as part of a sole trader business, then some personal liability may attach. However, provided the sole trader can evidence that use was made for the business, there are options available.

What happens to my bounce back loan if my company goes bust?

A bounce back loan is an unsecured debt. If the company must liquidate, the lack of personal guarantees associated with the loan means it’s treated as an unsecured debt. Unsecured debts are rarely paid in full on liquidation. In that case, as the Bounce Back Loan is secured by the Government, the lender will pursue the Government for repayment in full. Unsecured debt is written off once the company is liquidated, so you won’t be personally liable. Responsibility to repay the Bounce Back Loan remains solely with the company and liability will not be transferred to you as a director or other shareholders, provided you have complied with your duties as a director.

This means there is no risk to your personal assets or credit rating should your insolvent company not be able to repay the Bounce Back Loan.

However, during liquidation, a liquidator investigates your company’s financial history leading up to and during the insolvency, and if they find evidence that you have improperly used your bounce back loan, they could make you personally liable for the debt.

Call us today - we’re here to help

If you need help understanding the best way forward for your company, use our Live Chat during working hours, or Call Us today on 0808 164 4909.

Get in touch
alan smith
alan smith
2021-04-20
Let’s face it. Anyone going through tough times financially doesn’t need an insolvency practitioner shaking their head and wagging their finger in a “naughty naughty boy” manner. And that’s how much of the industry operates but thankfully NOT Middlebrooks. I know that the team at Middlebrooks, led by Claire Middlebrook, genuinely want to help people move on to the next chapter in their lives. They have a heart…and that’s exactly what you want from an IP when times are tough.
Ronnie Murison
Ronnie Murison
2021-04-20
Always a good experience working with the Middlesbrooks’ team.
customer
customer
2021-03-29
Darren Canham
Darren Canham
2021-03-03
Middlebrooks are first class, the support and service is exemplary. Thank you so much.
Maggie
Maggie
2020-09-07
I was supported to file for bankruptcy at a very difficult time in my life. Lauren was professional and informative giving guidance where required. Thank you Lauren x
Vapour fresh Ltd
Vapour fresh Ltd
2020-04-23
Would absolutely, without hesitation, highly recommend this company, . From the initial call to present day, they have been truly amazing to work with. While going through an extremely difficult period in my life, I needed to know that I was going to receive the right level of support to get me through this vital stage of my journey and Middlebrooks provided exactly that. Their vast knowledge and experience (which has been evident throughout the process) enabled me to proceed with confidence to the required conclusion. If you are reading this, you may be seeking the right advice and help too, look no further than this company. They won’t just talk you through the process, they will walk you through the process and they WILL get the job done, efficiently and professionally.
Emma
Emma
2020-03-30
Middlebrooks have been nothing short of fantastic helping me get my IVA approved. From start to finish they made me feel at ease and kept me up to date with everything that was happening. I cant thank or recommend them enough for everything they have done for me and my family.
Cheryl Barnes
Cheryl Barnes
2020-02-12
Middlebrooks have been fantastic and a great help. Couldn’t fault them at all and would highly recommend.
David Price
David Price
2020-02-10
Middlebrooks have been fantastic from start to finish.They kept me well informed & my administrator brooke has been brilliant.Pain & stress free now all thanks to these guys.Thankyou middlebrooks for been there for me at a difficult time would definitely recommend👍👍😊😊
customer Mrs caron malkin
customer Mrs caron malkin
2019-11-20
Thank you to Middlebrooks Business Recovery & Advice Ltd for all your help and advice in going forward and having my IVA approved, everything your team have done was so professionaly handled. Once again thank you.
Trustpilot rating score: 4.8 of 5, based on 48 reviews.

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