Bounce Back Loan and business failure

tvf1905

Can someone please clarify if my business was looking at taking out a BBL and for some unforeseen reason the business failed resulting in it having to be closed down, what will happen to the BBL - who is liable and will they come after me personally?

I can't seen to get a definitive answer and can't get through to HMRC for proper guidance. 

[Deleted User]

That depends what you mean by "my business".

If you are a limited company the debt dies with the company, provided no fraud or fraudulent trading has taken place and provided none of it was paid to the directors, all director's loans were not outstanding etc. However there would be some query as to why the company took out the loan less than a month ago as a going concern, but are now insolvent, which may end up making the directors personally liable. 

If you are a sole trader there is no difference between you and the the company, you are personally liable and will have to repay the loan in full regardless of if you stop trading. 

[Deleted User]

tvf1905 said:

I can't seen to get a definitive answer and can't get through to HMRC for proper guidance. 

An additional point, it is nothing to do with HMRC, BBLS is administered by banks, with a large scale security instrument in the background to cover the government guarantee. If you ask a bank "If I borrow this money and go bust do I not have to pay it back" they will not lend to you, that is a huge red flag.

mattyprice4004

How are we meant to know when you don't tell us which type of 'business' you are? 
That's a crucial part of this. 

Grumpy_chap

If a BBL was taken out by a business with the expectation that the business would fail, that would probably be fraud and the individual should expect to be pursued, whether a Ltd Co. or a sole trader.

tvf1905

We are an optical manufacturer who make up spectacles for independent opticians throughout the U.K. We have obviously seen a 100% decline in business during Covid and practices are still not allowed to test customer. Will we pick up in the next 12 months to sustain business we just can’t tell. The loan will help tie things up and pay staff, bills etc in the interim period. The biggest fear is taking out the loan and finding 12 months down the line numerous customer’s have gone bust or gone elsewhere to find cheaper products to make their business profitable, making our business unsustainable. 

dunstonh

tvf1905 said:

We are an optical manufacturer who make up spectacles for independent opticians throughout the U.K. We have obviously seen a 100% decline in business during Covid and practices are still not allowed to test customer. Will we pick up in the next 12 months to sustain business we just can’t tell. The loan will help tie things up and pay staff, bills etc in the interim period. The biggest fear is taking out the loan and finding 12 months down the line numerous customer’s have gone bust or gone elsewhere to find cheaper products to make their business profitable, making our business unsustainable. 

That should not be a problem.  If you are not in financial difficult prior to CV and fail afterwards due to lack of business post CV then the directors are safe.   If the directors have taken dividends above what is considered appropriate for a company going under, then they could be on the hook.

Grumpy_chap

There will always be a demand for optical lenses.
Customers going out of business doesn't seem like a massive deal because other opticians will always step up to take their place.
Customers going elsewhere for better value to make their business more profitable is not a new risk because of coronavirus, but an established risk that you always need to manage.
One way or another, you are in a pretty secure business sector.