Bounce back loan

boxermad68

What would happen if you were a sole trader and took out a BBL but due to personal circumstances were closing the business? Would you have to return the loan or keep the loan and just repay it over the loan term? 

[Deleted User]

If you are a sole trader then you are personally liable for the loan and bound by the terms of the loan. As a sole trader there is no separate business, you are the business, whether you choose to trade or not.

There may be an issue if at the point you took out the loan you already intended to stop trading as continuing to trade is a condition of the loan, but you can choose to stop trading after taking out the loan. However you still remain liable to repay the debt and bound by the terms and conditions. 

So in short, if you took out the BBL you would repay it over the loan term, regardless of if you continue to trade or not. 

Grumpy_chap

One of the eligibility is that the business is trading and intends to continue to trade. 
Technically, if you applied for the loan knowing that you did not intend to continue to trade, that would be fraud.
On a practical basis, as there is no legal distinction between a sole-trader and the business, and you made the loan payments in line with the agreed term I doubt anything would ever be done or that it would ever be found out.  You would probably have to keep declaring self-employment throughout the loan term.
If you default on the repayments, then the debt will be pursued.

boxermad68

I would fully  intend to repay the loan over the loan term but I’m concerned they would
request the full amount back right away if the business ceased trading. My accountant seems to think I will have to repay the full amount straight away. 

[Deleted User]

If you intend to stop trading do you have another job to allow you to continue to make the repayments? Have you already spent the loan or is it sat in a bank account?
As @Grumpy_chap says as long as you keep up repayments it is unlikely to cause an issue. Also from the terms and conditions I can see stopping trading does not trigger an immediate repayment, but different banks may have different rules. 

boxermad68

Yes I have other means of making the monthly  repayments just couldn’t pay it all back in one lump sum. I think my accountant is wrong in saying that’s what I’d have to do. 

Jeremy535897

boxermad68 said:

Yes I have other means of making the monthly  repayments just couldn’t pay it all back in one lump sum. I think my accountant is wrong in saying that’s what I’d have to do. 

There is nothing in the FAQs on BBLs to suggest that a sole trader who took out a BBL, and met all the eligibility criteria at that time, would have to repay it immediately if the business subsequently ceased. See:
https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/faqs-for-small-businesses/