Bounce back loan

louise0910

Hi, I’m really not sure where to go for information at the moment as everything I find online seems very vague.  I took out a bounce back loan last year to try and keep my business afloat during the first lock down.   Due to all of the lockdowns and restrictions since then my business is no longer viable and I’m going to have to stop trading.  I am a sole trader so don’t know where this leaves me regarding the loan.  Am I still expected to pay it out of what my husband earns and hopefully I may have a new job by the time they start taking payments?  If we can’t pay the full amounts can they take our personal possessions?  I’m really quite worried and don’t know what to do 😔

Jeremy535897

See the FAQs from British Business Bank:
https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/faqs-for-small-businesses/

As a sole trader, your personal assets (not your main residence or main vehicle, and not your husband's assets or income) are at risk. There are options for payment holidays and loan term extensions set out in the FAQs. You might want to head over to the debt free wannabe board for debt management advice:
https://forums.moneysavingexpert.com/categories/debt-free-wannabe

gizmo111

Jeremy535897 said:

See the FAQs from British Business Bank:
https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/faqs-for-small-businesses/

As a sole trader, your personal assets (not your main residence or main vehicle, and not your husband's assets or income) are at risk. There are options for payment holidays and loan term extensions set out in the FAQs. You might want to head over to the debt free wannabe board for debt management advice:
https://forums.moneysavingexpert.com/categories/debt-free-wannabe

What would be the situation if a small LTD company cannot continue to trade, due to the continued lockdowns, and there now being no income and no funds to pay the running costs of the business?

Jeremy535897

gizmo111 said:

Jeremy535897 said:

See the FAQs from British Business Bank:
https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/faqs-for-small-businesses/

As a sole trader, your personal assets (not your main residence or main vehicle, and not your husband's assets or income) are at risk. There are options for payment holidays and loan term extensions set out in the FAQs. You might want to head over to the debt free wannabe board for debt management advice:
https://forums.moneysavingexpert.com/categories/debt-free-wannabe

What would be the situation if a small LTD company cannot continue to trade, due to the continued lockdowns, and there now being no income and no funds to pay the running costs of the business?

There is no recourse to the assets of the directors, unless there has been fraud.

Grumpy_chap

I think (hope) that in the case of both sole trader and Ltd Co., there will be measures to establish that repayment really is impossible before the Government underwriting kicks in. 
Speculating as there are no rules yet, but you could imagine, for example, a sole trader who transfers all assets to their partner after saying they stopped trading may well be assessed in a manner similar to "deprivation of assets" that applies in other circumstances. 
Similarly, a Ltd Co. that took the BBLS, then paid a dividend or salary bonus, then ceased trading could well see the Directors pursued for recovery of the funds.

gizmo111

Grumpy_chap said:

I think (hope) that in the case of both sole trader and Ltd Co., there will be measures to establish that repayment really is impossible before the Government underwriting kicks in. 
Speculating as there are no rules yet, but you could imagine, for example, a sole trader who transfers all assets to their partner after saying they stopped trading may well be assessed in a manner similar to "deprivation of assets" that applies in other circumstances. 
Similarly, a Ltd Co. that took the BBLS, then paid a dividend or salary bonus, then ceased trading could well see the Directors pursued for recovery of the funds.

BBL - £15K in May - used to repay Director part of loan - £10 K - company still owes director £7.5K.  Balance used on fixed costs etc @ £600 per month, income started to pick up in Sept/October, invoiced £3K, lockdown November, now in Tier 4 and all bookings basically cancelled until March at present.   Director has been working PAYE at minimum wage to have an income.  No other employees in LTD.  It's not sustainable to keep paying out fixed costs with no end in sight.

louise0910

I think there’s going to be a lot of people in this situation before the end of this 😔

Grumpy_chap

@gizmo111
What industry sector do you work in?  
What are the fixed costs?  Can anything be done to mitigate them?  If they are premises related, are there any grants available?
With regard to your Director's salary - are you claiming furlough for this while closed under Tier 4?

Sadly, this  whole system will see some companies cease to be and through no fault of the individuals concerned or, indeed, the Government.  That will include some companies with BBL.

Sadly, also, back in May there were people writing that they would take BBL, buy a Tesla, then close the Ltd Co. / cease sole trader business and those people were seeing the loan as just a free car.  It is these type of people that there has to be some recovery against when I wrote "there will be measures to establish that repayment really is impossible before the Government underwriting kicks in"

gizmo111

Grumpy_chap said:

@gizmo111
What industry sector do you work in?  
What are the fixed costs?  Can anything be done to mitigate them?  If they are premises related, are there any grants available?
With regard to your Director's salary - are you claiming furlough for this while closed under Tier 4?

Sadly, this  whole system will see some companies cease to be and through no fault of the individuals concerned or, indeed, the Government.  That will include some companies with BBL.

Sadly, also, back in May there were people writing that they would take BBL, buy a Tesla, then close the Ltd Co. / cease sole trader business and those people were seeing the loan as just a free car.  It is these type of people that there has to be some recovery against when I wrote "there will be measures to establish that repayment really is impossible before the Government underwriting kicks in"

 
It's not me - I've been very lucky I work in social care and after the first 8/9 weeks I was able to trade safely at almost the same level as before the pandemic.
The business in question is Health and Social Care Training - there has been no furlough as the director has been marketing and taken the slightest bit of work offered.  Bookings are usually 2/3 months in advance. Costs are insurances, professional accreditation, website, and storage of equipment etc.  There doesn't seem to be any grants available that meet the criteria, and the balance is now to put more of his own money in or wind it up and start again when things are settled - but what impact would this have on him personally and the BBL outstanding?

Jeremy535897

He needs to take advice. If the company is insolvent, it should not be trading. If it was insolvent when it repaid the director's loan account in part, that may have to be repaid. It sounds like the company will have to go into  a CVA or liquidation unless the director puts more money in.

gizmo111

Jeremy535897 said:

He needs to take advice. If the company is insolvent, it should not be trading. If it was insolvent when it repaid the director's loan account in part, that may have to be repaid. It sounds like the company will have to go into  a CVA or liquidation unless the director puts more money in.

Sounds grim whatever......