Bounce Back Loan repayments can be extended if a company is struggling to maintain them. Your company’s lender should offer flexible repayment options, including:

• Extend their loan’s repayment terms from six to 10 years.
• Make interest-only payments for six months.
• Take a repayment holiday of up to six months.

These allow the company breathing space if they’re struggling to maintain the repayments, but more formal debt recovery solutions may be required if the company has debts it cannot afford to repay – these can indicate insolvency. Seek advice from an insolvency practitioner like us to explore the options best for your company. Depending on your company’s circumstances, this could involve writing off the Bounce Back Loan, restructuring the company or closing it, then starting again, or walking away.

How to Extend a Bounce Back Loan

If your company finds it hard to repay its Bounce Back Loan, extending the Bounce Back Loan’s repayment period is possible. The company can do so via a government initiative, which the company’s lender should provide: the Pay As You Grow (PAYG) scheme, which intends to make repaying a Bounce Back Loan easier for struggling companies.

These options include:

• Extend repayment term
  Companies can request to extend their loan term to 10 years from the original six. This is at the same fixed 2.5% interest rate.
• Interest-only repayments
  Companies can request to make interest-only payments on their Bounce Back Loan for six months. They can do this up to three times in the loan’s term.
• Request a repayment holiday
  Companies can request a repayment holiday of up to six months.

Help if you cant repay your company’s Bounce Back Loan

If your company cannot repay its Bounce Back Loan even with the help listed above, it can indicate deeper financial problems. Bounce Back Loans are unsecured debts in insolvency, and they didn’t require personal guarantees, thanks to the loans being 100% government-backed.

The company has other options if it can’t repay its Bounce Back Loan:

• Repay what you can afford in instalments
  Company Voluntary Arrangements (CVA) are formal repayment arrangements for companies that could be viable were it not for the level of debt. The IP will assess the company’s cash flow, calculate its monthly affordability, and propose an arrangement to creditors. These arrangements include all the company’s unsecured debts. The company continues trading for the duration, which can maintain goodwill with customers.
  More on Company Voluntary Arrangements
• Restructure the company through administration
  In some circumstances, the company would benefit more from restructuring than just repaying. Administration offers directors protection from creditor pressure while the insolvency practitioner restructures the company to rescue it as a going concern and return it to a profitable state, making it more appealing to potential buyers.
  More on administration
• Closing the company through liquidation
  Sometimes a company’s debt can be so severe that recovery isn’t possible, and the directors would be better off closing and walking away. The insolvency practitioner may suggest the company enters Creditors Voluntary Liquidation (CVL). This closes the insolvent company and writes off its unsecured debts, including an unaffordable Bounce Back Loan.
  More on Creditors Voluntary Liquidation (CVL)

Whatever your company’s circumstances, our experienced initial advice team can assess its circumstances and provide free, confidential advice with no obligation.

1. Speak with our initial advisers via phone or online chat. If we can help, we will arrange a free consultation with one of our consultants to discuss your situation in more depth.
2. During the consultation, we will advise if an insolvency procedure is the most appropriate route forward and what alternative options are available.
3. After your consultation, if there is an appropriate route forward, we will issue the relevant documentation for you to formally engage us.

In summary

Companies with outstanding Bounce Back Loans can apply to extend their repayment periods if they’re struggling to repay. Through the Pay As You Grow Scheme (PAYG), directors can extend their company’s repayment term from six years to 10 or delay repayments for six or 18 months. The company can also make interest-only repayments for six months, up to three times in the loan’s duration, or pause repayments after the initial instalment.

If the company has more substantial debts, it may benefit from a formal insolvency process. Which of these is most suitable depends on the company’s circumstances. Contact us for free, tailored, impartial advice with no obligation.

Case Studies

M J Squire Limited

Kelly Burton • Construction & Engineering • Creditors Voluntary Liquidation (CVL)

A bespoke joiners and shop fitters in Sheffield, M J Squire Limited, had been in its trade for more than 30 years.

However, recently it has been forced to close due to the downturn in the construction and retail industry.

The company was located at Orgeave Close in Sheffield, after working for many household names over the years including House of Fraser, Levi’s, Austin Reed and Tommy Hilfiger.

Until 2014, it had been a profitable company but over the past couple of years, it had been unable to secure profitable contracts.

February 10^th, 2016 saw the appointment of Wilson Field’s Andy Wood and Robert Dymond as liquidators. This development for the company came as a result of suffering cash flow problems.

Operations at M J Squire Limited have now ceased and regrettably, all nine roles within the company were made redundant.

Andy Wood, insolvency practitioner from Wilson Field, spoke about his work on this case. 

“Declining sales at M J Squires significantly impacted cash flow and the business’ ability to meet its liabilities. In the face of tough market conditions, the director has taken the difficult decision not to continue trading. The business has closed and the assets are being sold.”

“It is very sad to see this well-known local business cease to trade after over 30 years. The downturn in the retail sector has hit this business hard.”

Catering Butchers

Kelly Burton • Leisure & Hospitality • Administration

A previously successful, family-owned and managed catering butchers saw its turnover eradicated by the Covid 19 outbreak.

Following a review of all the options with the team at Wilson Field, the directors decided to appoint WF as Administrators.

Kelly Burton, director and insolvency practitioner at Wilson Field added:

“Like many over the pandemic, unfortunately there were some difficulties encountered as the business struggled to keep up its strong sales. However, we are continuing ro release the assets for the benefit of the creditors.”

Due to a lack of funding, the business unfortunately ceased to trade, however, the Administrators have managed to secure the debtor ledger and a sale of the remaining tangible assets, for the benefit of creditors.

Precision Engineering Business

Kelly Burton • Construction & Engineering • Administration

A bespoke precision engineering business, working predominantly in the automotive and aeronautical sectors, found itself experiencing cashflow difficulties caused by an increase in costs due to the uncertainties surrounding Brexit, and the loss of a key member of the sales team.

When the company’s largest customer reduced its spending by 50%, the director felt the business couldn’t continue and sought advice from the team at Wilson Field.

Wilson Field marketed the business and assets for sale, and a sale of the tangible assets was completed immediately following the administrators appointment, to an unconnected third party.

Kelly Burton, insolvency practitioner and director at Wilson Field, said:

“With so many complications surrounding Brexit, coupled with the loss of some key staff, the company experienced some cashflow difficulties it could not get out of.

There was a positive outcome in the end as some of the tangible assets within the company were sold, which meant a good return for creditors.”

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