bounce back loan

fivethreenine

I am a sole trader with a bounce back loan of £11000. I have just started making the repayments but the business has gone under and was under the impression that the loan was government backed and I would not lose my house, car etc if I could not make the repayments. Does anyone know if this is true?

Jeremy535897

From FAQs on BBLs:

What protections do I have under the Bounce Back Loan Scheme?
For lending outside the Bounce Back Loan Scheme, the Consumer Credit Act ordinarily requires lenders to provide sole traders, small partnerships and unincorporated associations seeking finance up to £25,000 with information before a loan is granted, and to provide further information throughout the course of the agreement. If the lender does not comply with these rules, they ordinarily lose their ability to collect repayments on the loan.

However, in order for the application process to be as fast as possible, those provisions of the Consumer Credit Act will not apply to the Scheme, although not all protections are removed. Lenders are required, under the rules of the Bounce Back Loan Scheme, to provide relevant information to businesses; and the collection of these loans will be regulated, meaning that, should businesses encounter financial difficulty, lenders will have to comply with relevant regulations.

In addition, lenders are not permitted to require personal guarantees for the Bounce Back Loan Scheme. For sole traders or small partnerships, who often risk their personal assets when borrowing, the terms of the Bounce Back Loan Scheme means no recovery action can be taken over a principal private residence or a primary personal vehicle.

That does not mean you can just walk away from the debt if your sole trader business fails. You need to discuss with your BBL lender all the potential options for repayment. See:

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/pay-as-you-grow/

If you cannot repay your creditors, you need to seek advice. See https://www.moneysavingexpert.com/loans/debt-help-plan/

Grumpy_chap

I would expect there is more to ceasing sole trader business and avoid repaying the BBLS than simply making a statement to that effect.

Likely to be some audit of how the funds were expended.

Otherwise, what stops the extreme case of took a BBLS on Monday, new car on Tuesday, ceasing trading on Wednesday?  With apologies to Craig David.

Jeremy535897

Grumpy_chap said:

I would expect there is more to ceasing sole trader business and avoid repaying the BBLS than simply making a statement to that effect.

Likely to be some audit of how the funds were expended.

Otherwise, what stops the extreme case of took a BBLS on Monday, new car on Tuesday, ceasing trading on Wednesday?  With apologies to Craig David.

What I said above. The debt doesn't just disappear, and an audit into why won't change that.

Grumpy_chap

By the reference into an audit, I was simply meaning they would trace where the funds went to assess where they can be recovered from.  Not that it would make the debt disappear, more that it would give the grounds for pursuit before the Government underwriting can be called upon by the banks.

Default would still be default and certainly on credit records making the future difficult.

What exactly does the OP mean by:

fivethreenine said:

the business has gone under 

Does that mean the business is insolvent?  In which case the normal insolvency processes would apply, with the business being a sole-trader, the business and the individual are as one.  It is only principal private residence and primary vehicle that were excluded from being considered part of the personal guarantee.

Jeremy535897

Grumpy_chap said:

By the reference into an audit, I was simply meaning they would trace where the funds went to assess where they can be recovered from.  Not that it would make the debt disappear, more that it would give the grounds for pursuit before the Government underwriting can be called upon by the banks.

Default would still be default and certainly on credit records making the future difficult.

What exactly does the OP mean by:

fivethreenine said:

the business has gone under 

Does that mean the business is insolvent?  In which case the normal insolvency processes would apply, with the business being a sole-trader, the business and the individual are as one.  It is only principal private residence and primary vehicle that were excluded from being considered part of the personal guarantee.

Yes, and if the BBL can take all the other assets to repay it, any other creditors are not bound by the same limitation. OP really needs to get debt management advice as soon as possible.

Grumpy_chap

Jeremy535897 said:

Yes, and if the BBL can take all the other assets to repay it, any other creditors are not bound by the same limitation. OP really needs to get debt management advice as soon as possible.

Indeed, though it may simply mean that by 

fivethreenine said:

the business has gone under 

The OP just means they weren't doing so well so called it a day and got a regular job.  In which case the assets of the business (even though not separated from the individual for a sole-trader) remain available.

Jeremy535897

Without further comment by the OP, we don't know.

fivethreenine

As the grumpy chap seems intent on a character assassination when it was a genuine request for advice (yes there will be some assets but they are being sold to pay what I can off the debt) I will refrain from posting further. 

Grumpy chap needs to get a life!!

Grumpy_chap

I don't consider that my remarks constitute character assassination and it is unfortunate that you took them that way.

There is only limited information in your OP and it does make a difference whether the situation is absolute insolvency or winding the business up because just no longer making enough and decided to go into regular employment.

As a sole trader, the business cannot be simply separated from the individual, unlike a Ltd Co.  It's only the house and first car that are protected from the BBSL repayment.

Hope you can get things sorted and not too painfully.

MattMattMattUK

fivethreenine said:

As the grumpy chap seems intent on a character assassination when it was a genuine request for advice 

What you perceive as "character assassination" others see only as asking for clarification of circumstances. 

fivethreenine said:

(yes there will be some assets but they are being sold to pay what I can off the debt) I will refrain from posting further. 

As a sole trader there are not two sets of assets, one "business" the other "personal". The debt of the BBL (or any other debts) do not end when a sole trader stops trading as they are personal debts. So whilst in relation to a BBL they can not claim against your primary home or primary vehicle, they can use other recovery methods, CCJs, bailiffs, attachment to earnings etc. 

fivethreenine said:

Grumpy chap needs to get a life!!

Yes, it is terrible he spends his time trying to help people.