Bounce back loan repayment demand

Mikki4321

TSB are demanding immediate repayment of my bounce back loan .
1,because i used the loan to buy premium bonds whilst waiting until i needed to use it ,which i have done now.
The govt site said its ok not to use right away and to invest until needed.
2 .for closing the buisness account i opened to be able to receive the loan ,which i I didn't need ,and wasn't told that i couldn't close it .
Any advice welcome please ,,andy

Grumpy_chap

The premium bonds may have been assessed as a non business use of the funds.

If you closed the business account, have TSB interpreted that as an indication that the business has, or will, cease trading?

Do you operate as sole trader or as Ltd Co?

MattMattMattUK

Did you apply for the BBL as a sole trader, partnership or limited company? 
On what basis did you purchase the Premium Bonds? (I agree with Grumpy that the Premium Bonds could be regarded as non-business use)
The terms and conditions for TSB's Bounce Back Loans require you to maintain your main business account with them, if you closed the account you have breached the terms and conditions and they demand the loan be repaid in full.

Jonesy1977

MattMattMattUK said:

Did you apply for the BBL as a sole trader, partnership or limited company? 
On what basis did you purchase the Premium Bonds? (I agree with Grumpy that the Premium Bonds could be regarded as non-business use)
The terms and conditions for TSB's Bounce Back Loans require you to maintain your main business account with them, if you closed the account you have breached the terms and conditions and they demand the loan be repaid in full.

Absolutely.  This should all be in the terms and conditions which you will have signed?

macman

I don't think PB's have any real relevance to this-they could not possibly know what funds you had used to purchase them. It's the fact that you have breached the T&C's by closing your business a/cthat has triggered this.

MattMattMattUK

macman said:

I don't think PB's have any real relevance to this-they could not possibly know what funds you had used to purchase them.

It depends, the OP says that they opened a business account to obtain the BBL, if they then used all the money in that account to purchase Premium Bonds from NS&I then closed the account it would be pretty obvious what they had done with the funds.

macman said:

It's the fact that you have breached the T&C's by closing your business a/cthat has triggered this.

I agree that this is still the primary reason they will have closed the account, it is a straight up breach of the terms and conditions, where as the Premium Bonds would be open to interpretation/argument. 

Jeremy535897

"The business must confirm to the lender that the loan will only be used to provide an economic benefit to the business, for example providing working capital, and not for personal purposes."

Presumably this is a sole trade, as companies cannot buy premium bonds. The trouble is that it looks like a personal purpose, rather than a business purpose. The contrary argument is that the business should invest surplus cash until it needs to spend it, and instant access cash investments have extremely poor returns.

Pennywise

Grumpy_chap said:

The premium bonds may have been assessed as a non business use of the funds.

If you closed the business account, have TSB interpreted that as an indication that the business has, or will, cease trading?

Do you operate as sole trader or as Ltd Co?

Limited companies can't buy premium bonds, so you have to assume the OP is a sole trader.

Grumpy_chap

Triple Matt has confirmed the TSB T'S&C'S require the business account to be maintained.  This has not been the case.

BBLS scheme requires that loan can only be used to provide an economic benefit to the business, and not for personal purposes.
Premium Bonds can only be held by an individual.  They cannot be held by a business.
The bank may know, either if the transaction went from the business account to NS&I with a reference that made it obvious, or if the bank was suspicious and the OP told them when asked.
Fact is clear that the rules of the BBLS have also not been followed.

With two areas that the rules appear not to have been followed, asking for any leniency from TSB in terms of a solution looks like a very big ask for them to agree.

The OP's best course of action might well be to draw the funds back from premium bonds and repay the loan.


Purely hypothetically, if the OP were to win on the premium bonds, would the OP have been quick to declare those funds as business assets and subject to the taxation regime that applies?  (We still don't know whether the OP is sole-trader or Ltd Co. Director.)

MattMattMattUK

Grumpy_chap said:

Triple Matt has confirmed the TSB T'S&C'S require the business account to be maintained.  This has not been the case.

Annoyingly I can not find the link to the full Ts&Cs which I found originally, I wanted to post direct to them for reference, if I can find it again I will update accordingly. 

Grumpy_chap said:

Purely hypothetically, if the OP were to win on the premium bonds, would the OP have been quick to declare those funds as business assets and subject to the taxation regime that applies?  (We still don't know whether the OP is sole-trader or Ltd Co. Director.)

I think that is one someone would need their accountant to advise on, as a Ltd Director they would have had to purchase them in their personal name, I guess they could account for the initial transfer as a Director's Loan, then repay it. For a sole trader I would presume that they could account for the win as a personal win as they can not be a business purchase, but I think it would certainly need an accountant to clarify, possibly a conversation with HMRC as well.

Grumpy_chap

MattMattMattUK said:

would have had to purchase them in their personal name
account for the win as a personal win as they can not be a business purchase

Confirmation as we know.  Premium Bonds have to be a personal purchase, so any win is personal.  The purchase had to be from funds suitably drawn from the business prior to purchase.
The OP implied they had bought the Premium Bonds from business funds still in the business, which is where the difficulty comes in.  (Plus breaching the TSB own rules.)

The OP's best route is to drawn the funds from Premium Bonds and repay the BBLS.