Sole trader cease trading with Bounce Back Loan?

Aries81

Hi, I’m trying to find information online but it all seems to be aimed at those who took a bounce back loan with a limited company. I started my own genuine small mobile food business beside a shopping centre just shortly before the pandemic hit and in the uncertainty of things took out a £12,000 BBL in the summer. I like most other people have been closed since Christmas due to the lockdown and in receipt of universal credit, but I am considering not going back to the self employment (without going into the details, I have some anxiety conditions which I take medication for and am finding working for myself in this climate extra stressful and not helping my condition). And a friend who works as a retail manager has offered me a job if I do stop working for myself.

Because of having taken out the BBL I feel duty bound to keep the business going, however if I leave self employment I’ll still be fulfilling my obligations and repaying the loan in full as agreed and have even enquired with the bank about starting monthly repayments early. But as a sole trader rather than a limited company I believe that I am considered to be the business myself therefore personally liable for repayments regardless of still self employed or not?

The bank has told me it should be fine from their perspective, but has anyone any more information on this? Thanks in advance.

macman

Yes, as a sole trader you are personally responsible for the debts of the business: there is no protection as there would be with a limited company. 

Aries81

Yea I understand that but I suppose what I mean is, can I legally cease trading as a sole trader having gotten the bounce back loan last year and return to regular employment while fully repaying the loan, is this allowed under government rules? I know things are a little different for sole traders and ltd companies but I’m finding it difficult to find any definitive answers online.

Jeremy535897

You should check the terms and conditions of your BBL, and discuss it with your bank. 

macman

As above, but I can see no reason why not. The debt is owed by you, not your business, and as long as you continue to repay it on the terms and schedule you already agreed then I can see no problem, whether you are still trading or not.

Jeremy535897

macman said:

As above, but I can see no reason why not. The debt is owed by you, not your business, and as long as you continue to repay it on the terms and schedule you already agreed then I can see no problem, whether you are still trading or not.

I would agree, but I recall an earlier thread where someone had chosen to invest the company's funds temporarily in premium bonds, and the bank demanded immediate repayment. I know that this situation is not the same, and it can be argued that the funds were used properly (assuming they were), but it might be best to check.

Aries81

Thanks guys. Yes I checked with the bank and at first they weren’t certain themselves but after toing and froing came back and said yes it would be fine and that I could even avail of the extended 10 year repayment. I’m wondering if it would incur any penalty or scrutiny from the government though or if they’d just leave it to the bank to decide.

macman

I think you are worrying quite unnecessarily. A large proportions of BBL's will never be recovered, whether due to business failure or fraudulent application. If the bank has said it's OK, then it's OK.
The gov'ts only role in this is to ultimately underwrite the loan book.

Jeremy535897

macman said:

I think you are worrying quite unnecessarily. A large proportions of BBL's will never be recovered, whether due to business failure or fraudulent application. If the bank has said it's OK, then it's OK.
The gov'ts only role in this is to ultimately underwrite the loan book.

I agree. If the bank's OK, that's good enough.