Understand your company's position and learn more about the options available
Can a company write off a CBILS loan?
- Close Company With Debts
- No.1 For Liquidations
- Stop HMRC / Creditor Pressure
- 25,000+ Directors Helped
- Immediate Advice Available
- Insolvency Practitioners
Can my company write off its CBILS loan?
A loan under the Coronavirus Business Interruption Loan Scheme (CBILS) cannot be written off while you are actively trading, however, you may be able to negotiate repayment terms. The only way your CBILS loan will be written off is if the company becomes insolvent and subsequently enters liquidation.
The Coronavirus Business Interruption Loan Scheme (CBILS) was introduced by the Chancellor at the start of the pandemic, with loans being backed 80 per cent by the government.
Personal guarantees weren't required for CBILS loans of up to £250,000. Unfortunately, some lenders did demand them, and this is a crucial element when considering whether or not your CBILS loan might be written off.
If you’ve provided a personal guarantee to your lender, they are likely to call it in if the company declines and cannot meet the repayments. So what are the ramifications of this, and is there anything you can do improve the financial situation of your company?
Take Our Free 60 Second Test
Get an instant understanding of your:
- Debt and Asset Position
- Formal Insolvency Options
- Next steps
Plus much more ...Start The 60 Second Test
Your company is fully liable to repay the loan if it continues to trade, as the 80 per cent government guarantee applies to the lender, not the borrower. Many businesses continue to struggle with cash flow following the Covid pandemic, however, and you may be finding it difficult to repay your coronavirus business loan.
If the company declines to the extent that liquidation is the only option, it may be possible to write off the loan. CBILS loans are unsecured, and it's unlikely the company will have sufficient funds to pay it in full following the liquidation sale of assets.
Can’t pay CBILS or Bounce Back Loan?
Don't worry - there are thousands of other company directors in the same position. If you are struggling to keep up with your Covid loan repayments, speak to a member of the Real Business Rescue team to discuss your options. It's Free & Confidential.
The team are available now - 0800 644 6080
There are instances where a director could become personally liable for a coronavirus loan, including where a personal guarantee has been provided.
Personal guarantees and CBILS
Some protection was provided for company directors by the government in relation to personal guarantees for CBILS loans:
- For loans over £250,000 a director's Principal Private Residence could not be used as security
- The lender can only recover 20 per cent of the outstanding amount via a personal guarantee after the proceeds of the sale of assets have been applied
When a company enters liquidation director conduct is investigated as a matter of course, to establish why the business failed. If misconduct becomes apparent during the investigation ‐ if the loan wasn't used for the economic benefit of the business, for example, or there were anomalies on the application form, it may leave a company director open to personal liability.
There may be various options available to you if your business is struggling to repay its coronavirus loan, including:
One possibility is to obtain funding from an alternative financier, such as a factoring firm or invoice discounter. This can significantly boost working capital for businesses with a strong sales ledger. Other alternative lenders include asset‐based financiers, who may be able to offer your business valuable lump sum working capital if it owns assets of significant value.
Another option could be to enter into a Company Voluntary Arrangement, or CVA. This means that your debts are restructured to make monthly payments more affordable for the company whilst you trade your way out of difficulty. A CVA typically lasts for up to five years, and is suitable for companies with temporary cash flow difficulties.
Need to speak to someone?
If your company is struggling with unmanageable debts, squeezed cash flow, or an uncertain future, you are far from alone. We speak to company directors just like you every single day, and we are here to give you the help and advice you need.
Call our team today on 0800 644 6080
Company administration may also be a potential route away from financial difficulty, especially if your company is experiencing severe creditor pressure. Company administration offers you an eight‐week moratorium on creditor action, so protecting you from a creditor’s winding‐up petition.
If you would like more information and independent professional advice on your CBILS loan, and support on taking the next steps, please contact our expert team. Real Business Rescue are insolvency specialists and can provide the guidance you need in this situation. We offer free, same‐day consultations, and operate a broad network of local offices around the country.
Further Reading on Can a company write off a CBILS loan?
Real Business Rescue are here to help
Still unsure whether liquidation is right for your company? Don't worry, the experts at Real Business Rescue are here to help. Our licensed insolvency practitioners will take the time to understand the problems your company is facing before recommending the best course of action going forward based on your own unique circumstances.
- UK’s Largest Liquidators
- 100+ Offices Nationwide
- 100% Confidential Advice
- Supported 25,000+ Directors
Looking for immediate support?
Complete the below to get in touch
We provide free confidential advice with absolutely no obligation.
Our expert and non-judgemental team are ready to assist directors and stakeholders today.