Lisa HoggView Profile
On 31st March 2021, the Bounce Back Loan Scheme (BBLS) and Coronavirus Business Interruption Loan Scheme (CBILS) closed for new applications and top-up applications. Both schemes proved invaluable during the pandemic, helping businesses stay afloat when robbed of their income sources and allowed them to stay afloat.
So, with these schemes no longer open for new applicants, are there any alternatives to Bounce Back Loans or Coronavirus Business Loans for businesses still struggling with coronavirus-related debts?
Additional finance and funding
If your problems are largely cash flow-related and you need to find a way to cover extra costs in the short term, you could consider a commercial finance arrangement. There are several types available, each suited to different circumstances. Invoice finance, for example, involves a business borrowing against the value of its unpaid invoices. It can be helpful when businesses are awaiting payment of a large or overdue invoice.
Asset finance allows businesses access to vehicles or other equipment at a smaller upfront cost while repaying the rest at an affordable rate, helping the business grow without heavily damaging its cash reserves.
Alternatively, bridging loans are short term solutions designed to cover one-off outgoings that could otherwise impact the company’s cash reserves. These loans are often repaid via the sale of a business asset or assets.More on finance and funding
If the company’s debts have pushed it into insolvency and its liabilities outweigh its assets, financial solutions may not be suitable. In these circumstances, formal insolvency arrangements can act as alternatives to Bounce Back and Coronavirus Business Interruption Loans.
Company Voluntary Arrangements
One of the most popular insolvency arrangements is a Company Voluntary Arrangement (CVA). The company repays a portion of its unsecured debt at a tailored, affordable rate on a monthly basis. Creditor pressure is paused for the repayment period, and once it ends (usually after five years), the remaining debt that the company can’t afford is written off.More on Company Voluntary Arrangements
If more substantial action is required, administration may be a better option. Administration works by having a licensed insolvency practitioner take control of the company, making the necessary changes to alleviate the debts and make the company profitable again. Like a CVA, the company is protected from creditor pressure for the administration’s duration.More on administrations
Creditors Voluntary Liquidation
If the debts are of such a level that recovery isn’t an option, you might be better off closing the company down. Creditors Voluntary Liquidations (CVLs) allow directors to close the insolvent company, act in the creditors’ best interests, and minimise their losses. Once the company is closed, any remaining debt is written off, leaving you free from the company’s debts and able to move on. If you’ve acted lawfully before and during the insolvent period, you can start a new limited company to continue the business.More on Creditors Voluntary Liquidations
Although the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme may be discontinued, alternatives exist for business owners and company directors. If the problems are cash-flow related, then financial solutions could help the company continue trading. If the problems run deeper and the company is insolvent, then a more formal solution may be required, repaying what the company can afford or by having a third party return it to a profitable state while continuing to trade. If the debts are of such a level that continuing to trade isn’t a viable option, then you can close the company down via a voluntary liquidation.