According to the latest figures (31 May 2021), 1,560,309 BBLs were approved for a total value of £47.36bn and most companies will have received correspondence from their bank reminding them that the first Bounce Back Loan payments would start soon in late spring 2021.
Once those initial reminders started arriving, we saw a significant increase in calls worried about the commitment to the BBL repayments. ‘What should I do if I can’t pay my bounce back loan payments?’, is probably going to be a question being asked for a while to come. There is support available but some of it is to be treated with caution and, as always, you should only use deferrals and other options if they are the right thing for your business finances. Therefore, it seems wise to look at the various options available given that, even though lockdown is easing, many businesses may not be back to normal for some time and so still may be struggling to make these payments.
The first area to visit is what options are available under the ‘Pay as you Grow’ scheme announced by the Government in February 2021. The options are as follows:
· Extend the length of the loan from 6 to 10 years. This will reduce the monthly repayments, but you will end up paying more interest overall.
· Make interest only payments for 6 months, with the option to use this 3 times during the term of the loan.
· Pause payments entirely for up to 6 months.
To take up one of these options, you will need to contact your bank.
It would seem that the banks are being generous with these options, but we do need to be sensible and put some context on the situation. As highlighted above there has been a lot of money lent by banks to businesses without the usual checks or processes. At the time nobody expected the continuation of lockdown or the length of the pandemic problem so additional measures had to be implemented. Yes, these are a welcome relief, but there is still a loan waiting to be paid at some point and eventually, the banks will want the money to start coming back in.
It must be remembered that a Bounce Back Loan is basically just the same as any other loan arrangement. It is a debt that is now due and the bank’s expectation is that the loan will be repaid in accordance with the agreement.
Once you have looked at the above options and decided they are not going to help you make your payments in the long run, if you have taken up these options already and are still unable to make the payment, I would suggest that it may be that your business is insolvent. If this is the case either call us immediately or press the red button on the main page to set up an appointment with us.
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