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I’m worried my business can’t repay CBILS or Bounce Back Loans

Affected by Covid-19? Immediate Rescue Or Closure Options Available

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Updated: 14th January 2021

What to do if you cannot repay your COVID-19 loans

Part of the government’s response to the coronavirus pandemic was to offer state-backed loans to support business cash flow. The Bounce Back Loan Scheme (BBLS) and the Coronavirus Business Interruption Loan Scheme (CBILS) provides a source of emergency funding to help businesses stay afloat in these unprecedented circumstances.

Some businesses may find that cash flow doesn’t improve over the longer-term, however, so what happens if you can’t repay a COVID-19 loan? There are various aspects to consider if you’re in this situation, including accessing further funding, but also the possibility of being held personally liable for repaying the loan.

Are you at personal financial risk?

The Bounce Back Loan Scheme and CBILS loans under £250,000 don’t require a personal guarantee. Some lenders, however, have demanded personal guarantees from directors of up to 100% of a loan, which exposes the directors to serious personal financial risk should their business be unable to meet the repayments at some point.

When you’ve provided a personal guarantee for a business loan it means the lender will expect you to repay all, or an agreed proportion, of the remaining loan if your company defaults.

They can pursue you through the courts for repayment, putting at risk your home and other assets. Furthermore, there are instances where a director can be held personally liable for repayment of their company’s debt even if they haven’t provided a personal guarantee.

These include:

  • Instances of misfeasance - deliberate mishandling of company funds
  • If preferential payments have been made – if the loan was used to repay a single creditor/lender in preference to others, for example, or to pay an existing loan where a personal guarantee was provided

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Professional help when you can’t repay your coronavirus loan

The case for seeking early professional advice if you can’t repay a COVID-19 loan is clear. Understanding and applying the rules surrounding company loans, personal guarantees, and insolvency, can be difficult as it’s a complex area and one that can have serious implications for directors if mishandled.

Don’t leave it too late to seek help, as the options narrow the longer you delay. Real Business Rescue are turnaround and insolvency specialists, so how can we help you if your business is unable to repay a COVID-19 loan?

  • We can make a professional assessment of your situation to establish the best way forward
  • Help you source and apply for alternative finance with a view to long-term recovery
  • Advise and assess your eligibility for Company Voluntary Arrangement (CVA) – as licensed insolvency practitioners we can negotiate with your creditors for a formal restructuring of your business debts within a CVA
  • We’re also available for appointment as administrators. If you’re eligible, company administration can protect you from creditor legal action whilst a plan is put in place

What if liquidation is the only option?

If the worst-case scenario is unavoidable we can carry out an orderly business closure, ensuring you meet your legal obligations as a director. We’ll also advise on your eligibility for director redundancy pay, and help you make a claim where appropriate - director redundancy is an issue that’s commonly overlooked when a business has to close down.

Real Business Rescue are business turnaround experts, and our principle aim is recovery. We can offer you a free same-day consultation to quickly assess your situation and provide the professional advice you need. Please contact one of the team if you’re struggling to repay a coronavirus loan – we operate a broad network of offices around the country.

Keith Tully


0800 644 6080

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