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What Happens If a Company Can’t Pay Its Bounce Back Loan

A bounce-back loan in the United Kingdom was a loan offered by the Government amid the Coronavirus pandemic. The loans were to help small businesses gain access to fast-track, u2018emergencyu2019 finance. Companies could borrow between u00a32,000 and u00a350,000. The loans could be used for;<br><br>- Staff wages, directors included.<br>- Rent and business rates,<br>- Monthly business costs or overheads such as phone and electricity bills.<br>- Finally, directors could use it to refinance other business debts to lower interest costs.<br>

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What Happens If a Company Can’t Pay Its Bounce Back Loan

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  1. What Happens If a Company Can’t Pay Its Bounce Back Loan? What is a bounce back loan? A bounce back loan in the United Kingdom was a loan offered by the Government amid the Coronavirus pandemic. The loans were to help small businesses gain access to fast track, ‘emergency’ finance. Companies could borrow between £2,000 and £50,000. The loans could be used for; ● ● ● ● Staff wages, directors included. Rent and business rates, Monthly business costs or overheads such as phone and electricity bills. Finally, directors could use it to refinance other business debts to lower the interest costs. While the flexibility offered by the PAYG scheme will give some companies the breathing space they need to repay their Bounce Back Loan, for others, this will simply not go far enough. It may also be the case that the Bounce Back Loan is just one of several loans or finance agreements the company has, and trying to repay them all is a step too far. So, what happens if your company is unable to pay the Bounce Back Loan, and can you be held personally liable for this debt?

  2. One of the main benefits of the Bounce Back Loan was that the government provided the banks with 100% security for the money they lent. From the company’s perspective, this meant that no personal guarantee had to be provided to secure the borrowing. Instead, if the company is not able to repay the money owed on the Bounce Back Loan, the bank will turn to the government for repayment rather than the company director themselves. While this security should provide some comfort to company directors, you should be aware that this government guarantee will only come into effect if the company is declared insolvent. While your company is still trading and is an active company on Companies House, you remain responsible for repaying the Bounce Back Loan.

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