Business bounce back loans

[twostepsbehind]

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]

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.

 

[twostepsbehind]

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]

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]

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]

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

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

 

[pugyrob]

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]

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

 

[martin-s]

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]

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.

 

[boxfish]

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]

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]

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]

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]

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

 

[diablo]

Bit pedantic but yes.

Not being pedantic: just pointing out that it isn't the limited liability that protects borrowers. Even sole traders are offered protection by the government's guarantee that accompanies these loans.

(The two posts should have appeared as one, but I couldn't get the double quote to appear in one post)

 

[pugyrob]

Honestly I just disagree with so much of that post. Not allowed to use the money to grow a business??? Seriously?

Inland revenue says "excuse me but you have used your business loan to grow your business. Against the rules" they are going to have someone come in and decide what is growing,saving and more with a business? Times about 1million businesses?

Anyway. Good luck to all with or without loans....

 

[twostepsbehind]

According to Money Saving Expert you can use them to pay dividends and even a salary to yourself as a director - nothing dodgy about that...

 

[martin-s]

Better to find information from the horse's mouth here I suspect:
https://www.british-business-bank.c...nce-back-loans/faqs-for-small-businesses/#f15

No recovery action can be taken over a borrower’s main home or primary personal vehicle. For sole traders or partnerships, who do not have the benefit of limited liability, other personal assets may be at risk of recovery action.

 

[JMI]

It's pretty obvious some will swindle the system on these loans and it will never be recovered.. more taxpayers money pissed away.
To pretend everything will recovered and we all live happily ever after is naive - the Gov has not the resources or the time.