Business bounce back loans

twostepsbehind · May 18, 2020

What will happen if a limited can't pay back the loan in a year's time?

Does it have to go into administration?

Adam H · May 18, 2020

It's an interest free loan for 12 months, there after its 2.5%.

So it doesnt need to be paid off in a year, but it would be advisable to take advantage of the interest free period.

It's no different from any other loan in terms of what happens if you fail to make repayments i suspect.

DomainAngel · May 18, 2020

They have this sewn up, they will first go after a director for fraud, so along with a ban, they will be personally liable as it was fraudulent, making wrong decisions as to how the money was spent you can get away with but anything else they will go after you.

If you blow the loan genuinely trying to keep a business afloat then at least the money was spent and someone else made something etc but they will check what it was spent on and any moved assets will see people behind bars and other companies stripped.

They wont even have to do the leg work, they will just ask them to prove it all and jump through all the hoops and if anything stinks then they will pounce.

Already seeing shops and franchises being dumped, took the 10k, 25k grant from the council and 25% of their TO in a loan must have been a dream come true to people who work in the businesses and usually only just breakeven having taken an average wage.

twostepsbehind · May 18, 2020

Trauiner said:
Part of the agreement process for the bounce back loans to LTD companies is that the director(s) are personally liable for the loan if the LTD company can not pay it back.

You will not be able to just close the company and walk away from the loan. The debt will follow you.

To be honest, if the business goes into administration or you can not pay it back, they will likely heavily investigate it as there are rules on what you can actually spend the money on.

Well, this just isn’t true since the loans are unsecured and 100% government backed...

Where are you getting this false information?

martin-s · May 18, 2020

Trauiner said:
Part of the agreement process for the bounce back loans to LTD companies is that the director(s) are personally liable for the loan if the LTD company can not pay it back.

That's not the case with BBLs specifically (no personal guarantee required), though is the case with CBILS.

pugyrob · May 18, 2020

Edited my clinical post

Basically a lot of the above is simply dreaming. People that exploit the system have a golden ticket to do so.

pugyrob · May 18, 2020

Trauiner said:
What I said is 100% true, you're just misinformed.

Go read the information from the british business bank and the agreements provided by the banks to sign before the accept the lending.

I

There is

Trauiner said:

It IS the case.

No personal guarantee is required to apply for the loan; which in most cases you normally would have been.

No personal guarantee to apply for the BBL does not mean you're not liable to pay back the loan. The only exception is they can not go after your primary household and private motor vehicle to get the funds.

If you run into difficulty paying back a BBL, you're liable to pay back the loan. End of.

The banks can only go to the government for their money back once they've exhausted all normal means of retrieving the funds from you. You can not simply say 'I can't pay back the BBL so wipe away what I owe you.'

Doesn't work like

Click to expand...

pugyrob · May 18, 2020

They cannot go after directors. Directors are not personally liable. The business has to pay the loan back, of course. If it cannot they take business assets. They were set up to encourage directors to take them.

Directors can use them to pay wages to themselves wages also. Fact. Proving fraudulence is near impossible as what you consider "good of business" and next person will vary massively.

These are not normal unsecured loans.

twostepsbehind · May 18, 2020

So back to my original question: what would happen to a limited company if it can’t pay the loan back?

Ben Thomas · May 19, 2020

twostepsbehind said:
So back to my original question: what would happen to a limited company if it can’t pay the loan back?

Likely nothing for a very long time. You have 6 years to pay this back. After that, if you still haven't paid it back, they will probably take another 2 years just getting round to the paperwork. Think of how many businesses are going to be taking these. And then they will likely register a debt against your company, and go down the same route they do with unpaid VAT payments etc. you'll have some feminist from HMRC and team of obese "bailiffs" at your registered office looking to take control of business assets.

martin-s · May 20, 2020

Trauiner said:
No personal guarantee to apply for the BBL does not mean you're not liable to pay back the loan. The only exception is they can not go after your primary household and private motor vehicle to get the funds.

Sorry, but you're misinformed. In a limited company, there is no personal liability for directors where a personal guarantee is not required.

Breakline · May 20, 2020

Ben Thomas said:
Likely nothing for a very long time. You have 6 years to pay this back. After that, if you still haven't paid it back, they will probably take another 2 years just getting round to the paperwork. Think of how many businesses are going to be taking these. And then they will likely register a debt against your company, and go down the same route they do with unpaid VAT payments etc. you'll have some feminist from HMRC and team of obese "bailiffs" at your registered office looking to take control of business assets.

Yep, that's exactly right.

Ben Thomas · May 20, 2020

martin-s said:
Sorry, but you're misinformed. In a limited company, there is no personal liability for directors where a personal guarantee is not required.

Aye, the clue's in the name really.

Ben Thomas · May 20, 2020

Trauiner said:
The people who have been accepting these loans need to start reading the agreement terms.

Yes, they do. But it doesn't change the fact that these are business loans and you cannot get one if you aren't a business ie. limited company or LLP. The liability for loans against companies will never be charged personally to any shareholders of said companies and will land solely on the company as a legal entity. The terms are no different for this. This isn't a special agreement, it's a business loan agreement like any other.

Though, I'm unsure if these terms will differ from lender to lender.

boxfish · May 20, 2020

Trauiner said:
The people who have been accepting these loans need to start reading the agreement terms.

I've re-read the terms to mine and there is definitely no personal guarantee.

They can come after company assets but nothing personal.

martin-s · May 20, 2020

Trauiner said:
The people who have been accepting these loans need to start reading the agreement terms.

I wouldn't disagree, but that doesn't mean that you're right about the personal guarantee!

diablo · May 20, 2020

Ben Thomas said:
Yes, they do. But it doesn't change the fact that these are business loans and you cannot get one if you aren't a business ie. limited company or LLP. ....

Not true. Small Business Bounce Back Loans are available to limited companies, limited liability partnerships and sole traders.

diablo · May 20, 2020

Trauiner said:
The people who have been accepting these loans need to start reading the agreement terms.

What happens if I find I’m struggling to repay the loan?

You should talk to the lender if you are experiencing financial difficulties and they will have standard processes in place to support customers in those circumstances.

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.

https://www.british-business-bank.c...nce-back-loans/faqs-for-small-businesses/#f16

pugyrob · May 20, 2020

Sigh..... this isnt complicated stuff.

Trauiner. Could I suggest you stick to facts when talking about these loans. Personal guarantees dont exist on these... I cant imagine how you found any contrary info?

Directors are always liable for fraud. That's pretty obvious. That's the only way anyone would ever become personally liable for the bbl loans if borrowing in a ltd company. That is crazy hard to prove also and a massive longshot to prosecute at the best of times, let alone these