Close Menu
UK Liquidators

I’ve received a Bounce Back Loan Demand Letter from the Bank

Low-Cost Liquidation
100% Confidential
Stop HMRC & Creditor Pressure
Partner-led Service

Advice for directors who have missed BBL payments

The Bounce Back Loan Scheme (BBLS) was introduced in May 2020, and helped businesses to survive the severe financial impact of Covid. It bolstered cash flow and supported day-to-day business operations, but many businesses have struggled to meet their Bounce Back Loan repayments.

The government guarantee provided to the scheme applied to lenders rather than businesses, so if you’ve received a Bounce Back Loan demand letter from your bank, you may be wondering how to proceed.

The corporate structure protects you from personal liability

It’s important to understand that as a company director you’re not personally liable for your company’s debts. The corporate structure means that the business is a separate legal entity, and in the majority of cases, its finances are distinct from those of its directors.

Unless there has been misuse of the loan, you’re protected by the ‘veil of incorporation’ when it comes to business borrowing. So what are some examples of ‘misuse’ in terms of the Bounce Back Loan Scheme?

What constitutes misuse of a Bounce Back Loan?

These are a few examples of how a Bounce Back Loan might be misused:

Using the money for personal purposes

A Bounce Back Loan was intended to be used ‘for the economic benefit of the business,’ such as paying suppliers, employee wages, commercial rent, or day-to-day operational expenditures to keep the business running. This means it will be deemed misuse if you’ve used the Bounce Back Loan for personal purposes.

Overstating your business turnover on the loan application

The maximum allowable Bounce Back Loan amount was based on up to 25% of business turnover. This means that if you significantly overstated your turnover on the loan application, it could be viewed as being against the rules of the scheme.  

Giving the funds to a family member/third party

Handing the funds from your Bounce Back Loan to a family member or other third party contravenes the basic requirement to use it for business purposes.

Are banks speculatively sending out these demands for payment?

On occasion some banks, such as Santander, appear to be sending out speculative letters to chase Bounce Back Loan arrears, to see if companies will pay. These letters seem to be automated after three months of missed repayments.

If you’ve received a Bounce Back Loan demand letter from your bank, it’s worth considering whether it could be a speculative letter, but also advisable to obtain professional advice from a licensed insolvency practitioner (IP).

This professional guidance will be key in making the right move, as the IP will be able to base their assessment of the letter on your business’ individual circumstances.

Directors aren’t typically liable for business loans

The situation around Covid financing is complex, but it’s important to know that under normal circumstances you aren’t liable to repay business funding as a limited company director.

If your business enters insolvency, the protection provided by the corporate business structure can be removed should misconduct or misappropriation of funds be found. The letter you’ve received may simply be a speculative attempt by your bank to recover the money, however.

Seek professional help

It’s important that you don’t ignore the letter, and that you seek a professional viewpoint. UK Liquidators are insolvency experts and can provide reliable guidance if you’ve received a letter of demand in relation to your Bounce Back Loan.

Please get in touch to arrange a free, same-day consultation so we can ensure you understand your options and the potential ramifications. We operate a broad network of local offices throughout the UK, so you’re never far from the professional support you need.

Jonathan Munnery
Insolvency & Restructuring Expert

If you are considering liquidation for your limited company, taking advice from a licensed insolvency practitioner can help you understand your options.

Is liquidation the right option for you?

Take our 60 second test and find out

Company health risk assessment
Types of liquidation available
Alternatives to liquidation
Understand your next steps
60 Second Liquidation Test
Pages related to Advice for directors who have missed BBL payments
Shareholders Meeting
Can a 50-50 shareholder put a company into liquidation?
Director Back Work
Can I be a director again after my business folds?
Liquidator Investigating The Company
Can I be investigated if my company goes into liquidation?
Did you know?
Are you eligible to claim Director Redundancy?
As a Limited Company Director you may be entitled to claim Director Redundancy - Average UK claim is £9,000*.
Ready to Liquidate?
Express Liquidation Service
Ready to start liquidating today? Complete the form and a member of our team will be in touch.
Please note: By completing this form you are not liquidating your company
Contact the UK Liquidators Team

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.

  • Free initial consultation
  • Strictly confidential
  • Fully licensed insolvency practitioners
  • Local office support
  • Named case handler throughout
Logo Tma
Logo Business Recovery
Logo Cse
Logo Iip

Looking for immediate support?

Complete the below to get in touch

 
 
 
 
 
100% Free & Confidential Advice

This site uses cookies to monitor site performance and provide a more responsive and personalised experience. You must agree to our use of certain cookies. For more information on how we use and manage cookies please read our PRIVACY POLICY