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Usually, this is where a business overstated its turnover, did not meet the eligibility rules, obtained multiple loans for the same business, or used the money for personal spending unrelated to the business. Attempts to dissolve a company to avoid repayment can also attract investigation.
Depending on the circumstances, misconduct may lead to personal liability for directors, disqualification or criminal prosecution.
The key questions are whether the application was accurate and the funds were used appropriately. As long as the circumstances of taking the loan were legitimate and there is no cause for concern around the directors actions, there should be no personal liability.
If you have a BBL and insolvency is likely, you should contact us to clarify your position.
The Bounce Back Loan offer was seen as a lifeline for many businesses, and it certainly provided a much-needed injection of cash. Now they have come due for payment, and for many businesses, they have done so before the company had fully recovered from the effects of the pandemic. For some, they are now another burden on a business that is already struggling financially and for others, they are the catalyst for seriously considering insolvency.
Although many people considered them to be 'free money' with a cast-iron guarantee that the government would pay them, the truth is somewhat different.
These are the most common questions we are being asked about BBLs
If you are having problems paying your bounce back loan there are various options available to you that may help you in the short term. The banks have agreed put in place a series of what are known as 'Pay as you Grow Options' and with these you can:
· Extend the length of the loan from 6 to 10 years
· Make interest-only payments for 6 months
· Pause payments entirely for up to 6 months
To take up one of these options, you will need to contact your bank.
These may seem like generous options but they do come with a warning in some cases and all of them could just be delaying the problem and not solving it. Before you make a decision we suggest you click here for a more complete discussion of these options
If you find you are in a situation where you cannot currently pay back your BBL and the options offered to help in the short term are not going to help you pay the loan in the long run, then you may well be looking at insolvency.
In a situation of insolvency, the Bounce Back Loan repayment may well be covered by the initial terms of the BBL loan conditions and revert back to the government for payment. However, this is not quite as cut and dried as it would initially seem. Firstly, the banks will look to obtain payment before anything else is considered, and secondly, and more importantly, there are several ways in which the initial terms of the loan may apply.
If you are looking at insolvency and have a BBL then you really do need to seek advice. We have seen a considerable number of cases where the Directors of a business could end up being liable for the loan. For more information on the ins and outs of BBLs and insolvency click here