20i Reseller Hosting

Business bounce back loans

Discussion in 'The Bar' started by twostepsbehind, May 18, 2020.

  1. twostepsbehind United Kingdom

    twostepsbehind Active Member Acorn Supporter

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

    Does it have to go into administration?
     
  2. Domain Forum

    Acorn Domains Elite Member

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    articles.co.uk
     
  3. Adam H

    Adam H Well-Known Member Exclusive Member

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    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.
     
  4. DomainAngel

    DomainAngel Well-Known Member

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    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.
     
  5. Trauiner United Kingdom

    Trauiner Active Member

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    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.
     
  6. Trauiner United Kingdom

    Trauiner Active Member

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    They'll be in for a nasty shock. The money can only be spent on things providing 'economic benefit to the business.' If they have dumped their businesses and think they're walking away with free money, they're in for a nasty surprise.
     
  7. twostepsbehind United Kingdom

    twostepsbehind Active Member Acorn Supporter

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

    Where are you getting this false information?
     
  8. martin-s United Kingdom

    martin-s Well-Known Member

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

    pugyrob Well-Known Member

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    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.
     
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  10. Trauiner United Kingdom

    Trauiner Active Member

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    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 they accept the lending.

    There is a massive difference in needing a personal guarantee to be eligible for the loan application process and being personally liable for the loan. That may be were you're getting mixed up.

    Banks are actually declining some people if they feel it's too high risk for them or they feel it would be a struggle for them to get paid.
     
    Last edited: May 18, 2020
  11. Trauiner United Kingdom

    Trauiner Active Member

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    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 that.
     
  12. pugyrob United Kingdom

    pugyrob Well-Known Member

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    Last edited: May 18, 2020
  13. pugyrob United Kingdom

    pugyrob Well-Known Member

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    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.
     
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  14. twostepsbehind United Kingdom

    twostepsbehind Active Member Acorn Supporter

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

    Ben Thomas Well-Known Member

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    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.
     
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  16. martin-s United Kingdom

    martin-s Well-Known Member

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

    Sirbigman Active Member

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    Yep, that's exactly right.
     
  18. Ben Thomas

    Ben Thomas Well-Known Member

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    Aye, the clue's in the name really.
     
  19. Trauiner United Kingdom

    Trauiner Active Member

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    The people who have been accepting these loans need to start reading the agreement terms.
     
  20. Ben Thomas

    Ben Thomas Well-Known Member

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    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.
     
  21. boxfish United Kingdom

    boxfish Well-Known Member

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

    They can come after company assets but nothing personal.