Bounce-Back loan

Ronellis54

Hello.
My son had a good business which was ruined by the COVID situation. He took out a personal (his company was not Limited) loan from HSBC of £50,000 when he had hopes of resurrecting his business. Now the bank are demanding his loan be repaid, or they will make him a personal bankrupt. He has only just started a new career and it will take years for him to recover. He is 40 yo, has a family including 3 kids, and is renting his house. Please can we have some advice as to whether he has to pay back the loan. Thank you 

Grumpy_chap

Ronellis54 said:

Hello.
My son had a good business which was ruined by the COVID situation. He took out a personal (his company was not Limited) loan from HSBC of £50,000 when he had hopes of resurrecting his business. Now the bank are demanding his loan be repaid, or they will make him a personal bankrupt. He has only just started a new career and it will take years for him to recover. He is 40 yo, has a family including 3 kids, and is renting his house. Please can we have some advice as to whether he has to pay back the loan. Thank you 

Is the business still trading, or has your son closed the sole-trader business and taken an alternative job elsewhere?  I was not sure what you meant by "just started a new career".

The maximum funding under BBLS was 25% of turnover, capped at £50k.  If your son drew the full £50k, then his turnover in the reference years had to be £200k or more.  Is that correct?

Is it possible that there was an error in the application and that is why the bank are seeking to recover the funds in short order?

Has your son maintained any payments due so far for the BBLS?
Has your son applied for any of the schemes to soften the repayments?  Payment holiday, interest-only period, extend the term to 10 years.

Were all the funds used for purposes permitted within the rules of the BBLS?

For a sole trader, the only items excluded from being claimed as recovery actions are the principal private residence (N/A for your son as he rents) or a primary personal vehicle.  Anything else can be considered as an asset that can be treated as security.

Considering all of the above will only helps to explain where the situation is - though if you can understand the bank's position that will help. 

For a solution, has your son prepared a SoA (Statement of Affairs) (see the DFW part of the forum, where there may be others that can better advise on the ) and / or taken advice from organisations such as Step-Change or CAB?  The last thing the banks want is to force bankruptcy and only recover part of the loan value.  If your son prepares a full position and proposes a repayment plant, that may well assist in getting an understanding from the bank to resolve the issue going forwards.