Require Immediate advice? 0800 063 9262
Bounce Back Loans have been one of the most popular emergency finance options for businesses which may have faced financial decline due to coronavirus. With no repayments or interest to pay for 12 months from commencement, and a low fixed interest rate of 2.5%, Bounce Back Loans offered some certainty when business cash flow was in dire need of support.
A key feature of the Bounce Back Loan Scheme (BBLS) was the government’s guarantee to repay lenders 100% of outstanding loan amounts if their borrower went bust. This offered lenders confidence to sanction loans in the unprecedented circumstances of the global pandemic, while also meaning company directors were not required to provide a personal guarantee for borrowing under the Bounce Back Loan scheme.
Concerned about the National Insurance increase?
For the 2024-25 tax year, the rate of employer National Insurance increases from 13.8% to 15% adding yet more pressure onto already squeezed cash flows. If you are worried about the impact this could have on your company’s finances, talk to the experts at UK Liquidators. As licensed insolvency practitioners we can explain your options and help you plot a way forward. Call today on 0800 063 9262.
The guarantee only applies to lenders, and borrowing businesses continue to be fully liable for repayment. The government guarantee is being increasingly called into play, however, due to the ongoing financial difficulties that businesses are experiencing.
A further problem for the government is that some directors have used an unofficial method of closing their company that’s only intended for solvent businesses known as ‘strike off’. For this reason, new legislation has been brought in to limit the way in which businesses can close down if they’re running an outstanding Bounce Back Loan, or owe tax to the Treasury.
It effectively extends the penalties that are already in place when companies undergo formal liquidation, and when directors are found to have committed some form of wrongdoing.
Liquidation Portal
For Company Directors
When a company closes down it may eligible to do so in an unofficial manner via a process known as voluntary strike-off or company dissolution. Directors who initiate voluntary strike-off must inform all creditors of their intention, and crucially, the business must be solvent.
This form of business closure is inexpensive, and has provided an attractive method of closure that’s been incorrectly used by some directors – in other words, closing their business down when it has gone bust.
The government aims to make the procedure less accessible from now on. They’re subjecting directors to investigation by the Insolvency Service if they use voluntary dissolution when an outstanding Bounce Back Loan exists.
It brings the process into line with formal liquidation, whereby directors’ actions leading up to closure are scrutinised for misconduct or other wrongdoing. Banks are also being encouraged by the government to object to applications for strike-off by companies with unpaid Bounce Back Loans.
Start your online liquidation today
If you have decided liquidation is the right option for your limited company, you can take the first step and begin the process online using our online portal. Starting the process is quick, simple, and can be done at a time that suits you. Your information will be submitted to your local UK Liquidators insolvency practitioner who will be with you every step of the way. Click here to start your company’s liquidation online.
If your company is unable to repay its Bounce Back Loan, it’s crucial to seek licensed insolvency help as soon as you’re aware that your business is struggling. You may be able to avert closure altogether using the broad range of supportive insolvency solutions available in the UK.
If the business cannot be saved, acting quickly in seeking professional advice from a licensed insolvency practitioner demonstrates your intention to place creditor interests first – a key legal duty for directors of insolvent companies.
Creditors’ Voluntary Liquidation, or CVL, enables you to meet your legal obligations, and reduce the chances of wrongful trading or misconduct accusations that could lead to sanctions.
Penalties for misdemeanours can be severe for company directors, and include personal liability for business debts. Disqualification is also a possibility, and could extend for up to 15 years.
UK Liquidators specialises in helping directors close down their companies in an orderly manner, and can advise you on what happens to your outstanding Bounce Back Loan. We can also provide professional advice if you’ve already closed your insolvent business down using voluntary strike-off.
Our partner-led team work from offices throughout the country, and can offer you a free, same-day consultation to quickly establish your best options.
By completing the test, you will receive:
If you are considering liquidation for your company, taking expert advice at an early stage is crucial. At UK Liquidators, our team of licensed insolvency practitioners are committed to providing limited company directors with the help and advice they need to make an informed decision.
Looking for immediate support?
Complete the below to get in touch