The Bounce Back Loan Scheme (BBLS) allows you to borrow between £2,000 and £50,000, capped at 25% of your total turnover until 31 March 2021. No interest will be charged, and no repayments will need to be made in the first 12 months – after 12 months all banks will charge a fixed 2.5% annual interest. You can make repayments over a period of up to 10 years.
You are scheduled to make 60 repayments of the amount you borrowed if you do it over a period of 6 years – over a period of 10 years you will be making 108 payments.
After the first 12 months, each month you pay 1/60th or 1/108th of the capital plus the interest that’s built up that month – early repayment is permitted at any stage without added fees. You are able to move to interest-only repayments for a period of up to 6 months and, under certain circumstances, pause repayments for a period of up to 6 months (this can only be used once and only after having made 6 repayments).
It is important to remember that outstanding debts cannot be written off – the company dissolution procedure does not allow any debts to be struck off.
If you have taken out a Bounce Back Loan, you can still liquidate your company because BBLs are classified as an ‘unsecured debt’ as lenders were guaranteed their money by the British government therefore eliminating the need to enforce their usual security. As a result, if a company is insolvent, the financial provider must wait in line to be paid by the liquidation practitioner who is running the liquidation.
Knowing how to take control of your business finances to maximise profits can be difficult, especially with the current climate. Knowing the common mistakes to avoid can be difficult and can leave you feeling unsure.