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Options If Unable To Repay Your BBL

My business can’t pay its creditors.

Can you write off my Bounce Back Loan?

If not, can I liquidate with a bounce back loan?

Is my business insolvent?

What options do I have as a company director?

  • Options If Unable To Repay Your BBL – Payment holidays

On the 24th of September 2020, Rishi Sunak announced a new Pay As You Grow scheme to help Bounce Back Loan Scheme borrowers.

The PAYG scheme allows BBL borrowers to extend their loan term to ten years, and makes interest-only payments for up to six months and three times over the extended period. 

Using these options individually or together could give you the extra breathing space you need if you have difficulty making repayments.

Recognising that you will pay more interest if you move to interest payments or take a payment holiday is essential.

  • HMRC Time to Pay

Another option if you struggle to repay your loan is to request a time-to-pay arrangement with HMRC. A TTP arrangement allows you to pay back outstanding corporation tax, PAY/NI or VAT liabilities in instalments over six or 12 months.

Therefore, relieving the pressure could help you repay your loan on time. Nevertheless, it is essential to remember that HMRC must be confident that your company can make the total repayment before accepting a proposal.

In addition, the evidence must support your proposal that your company is viable and able to repay the debts in the proposed time.

  • Company Voluntary Arrangement (CVA)

A company voluntary arrangement allows insolvent limited companies to repay creditors their debts they currently cannot in affordable monthly amounts over an agreed amount of time, often sixty months. It is a structured repayment plan that allows you to renegotiate debt and continue to trade.

Once in place, the CVA will stop all interest and charges, stopping further creditor legal action. The CVA effectively ring-fences your business whilst solving your financial issues.

Once the CVA is approved, you will pay towards your business debts for an agreed period. Once that period completes, the CVA supervisor will write off your remaining debts.

  • Pre-pack administration

If your company has difficulty paying its debts, it would be viable if the directors could restart it with a pre-pack administration.

Pre-pack administration is a legal insolvency procedure that is a legitimate way to restructure a struggling company. It allows your business to be packaged and sold to a new company that the same directors often control.

A liquidator is appointed to wind up your company, and the former directors will set up a new company to purchase the former company’s assets and business.

Once sold, you can restart without your debts, effectively preserving an insolvent company in a new but essentially unchanged form. Moreover, your business can also continue trading during this process.

  • Options If Unable To Repay Your BBL – Liquidation

Finally, suppose the worst-case scenario is inevitable, and your business needs to close. Then, a Creditors’ Voluntary Liquidation (CVL) could be the right option, instead of waiting for either: –

  • a winding up order, compulsory liquidation, and/or 
  • CCjs followed by bailiffs.

A CVL enables directors to take control while appointing a licensed insolvency practitioner of choice, subject to the creditor’s approval. A CVL usually provides a rapid process to legally close a limited company.

So by: –

  • closing the doors, 
  • dealing with the debts, and 
  • cancelling all leases, 
  • Striking the company of the registrar at companies house.

The liquidation can conclude, permitting directors to leave and start a new limited company, subject to no adverse findings against the former directors.

Where can I find further advice on my bounce back loan?

If you have difficulty repaying your bounce back loan?

Then sit back and prioritise seeking expert help and advice.

HBG Advisory provides a free, no-obligation consultation with a member of our insolvency team, who will take you through your options while experiencing financial issues. The team at HBG Advisory listens to your problems while developing a jointly agreeable strategy for you and your limited company.

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Bounce Back Loan advice for Company Directors

Directors should seek professional advice if they have Bounce Back Loan worries regarding repayments. The UK government introduced the COVID-19 support scheme to support businesses through the pandemic. However, repaying the loans has been difficult. So ensure you seek advice sooner than later.
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