Directors are not personally liable for Bounce Back Loans taken out by their company. Instead, the government provided security to the banks in the event of non-repayment of a Bounce Back Loan. The exception to this rule, however, is if you have misused Bounce Back Loan funds; if this is the case, you may be held personally liable for the balance of the loan.
As the Covid-19 pandemic threatens to hinder businesses across the country, the government has announced an unprecedented support package to help companies and their shareholders survive these challenging times.
Following widespread criticism of the Coronavirus Business Interruption Loan Scheme (CBILS) which saw a small fraction of applicants successfully secure funding, the government subsequently introduced the Bounce Back Loan Scheme (BBLS) as an alternative.
What are Bounce Back Loans?
As the name suggests, Bounce Back Loans are designed to help Britain’s SMEs weather the current government-imposed restrictions on business, and give them the resources to ‘bounce back’ quickly once trade is permitted to resume.
Aimed at small businesses, the BBLS give companies access to loans worth up to 25% of its turnover, up to a maximum of ?50,000. They are provided interest-free for the first 12 months, with a competitive rate of 2.5% levied afterwards and fixed for up to six years. The government provides security for 100% of the loan amount, lowering the risk to lenders.
Chancellor Rishi Sunak, promised the application process would be swift, with companies able to receive funds within 24 hours of applying. However, so far, the loans have failed to live up to these lofty expectations.
Struggling to access a Bounce Back Loan?
In spite of the government’s assurances of a much smoother application process than that experienced by CBILS applicants, unfortunately the reality has seen many company directors struggle to get a Bounce Back Loan, finding themselves once more locked out of the help on offer.