What to do if your struggling to repay BBLS or CBILS

What to do if your struggling to repay BBLS or CBILS

Are you struggling to repay BBLS or CBILS loans?

Weeks into the start of the pandemic the government offered businesses financial help to get them through the first lockdown.

The Coronavirus Business Interruption Loan Scheme was followed by Bounce Back Loans with both offering much needed support. Many businesses needed to use the loans, and £75 billion was accessed.

But few people expected a second lockdown or restrictions to hit so many businesses the following year. With a reduced cashflow over the past 12 months and ongoing restrictions, some businesses may now be facing difficulties they didn’t anticipate when they first accessed the loans.

Both schemes closed in March this year and the time for repaying the loans is looming large. Indeed, many people are probably repaying loans now.

So what should you do now?

First of all, don’t bury your head in your sand. Our summary and advice will help!

What was CBILS?

The Coronavirus Business Interruption Loan Scheme was introduced in March 2020. It provided financial support to smaller UK businesses losing revenue and seeing cashflow disrupted due to the Covid-19 outbreak.

Using a range of lenders and partners, the British Business Bank offered up to £5 million in the form of:

  • term loans
  • overdrafts
  • invoice finance
  • asset finance

Lenders were given a government-backed guarantee for loan repayments. Lenders took no personal guarantees below £250,000.

What was BBLS?

The Bounce Back Loan Scheme offered loans of up £50,000 capped at 25% of total turnover from May 2020. Repayments could be taken over 6 years, but this was then extended to 10 but you had to apply for this. The government set a 2.5% interest rate and repayments were deferred for 12 months. The first 12 months of interest was paid by the government.

I’m struggling to repay BBLS or CIBLS

You will not be alone in struggling to repay the loans. Many business owners expected the first lockdown to be lifted within months and never expected a second or even a third or ongoing restrictions.

The impact of reduced cashflow and uncertainty could mean you are now facing repayments with less money available than expected when you took the loan.

Don’t forget the Pay As You Grow scheme. This repayment plan is flexible and allows you to tailor your repayments. But if that scheme can’t help, then there are ways you can make changes to repay the loan.

What if we can’t repay the loans?

Should you plan to keep your business running, then you will need to deal with repaying the loans. Although they did not require personal guarantees, the government will only step in to repay the lenders if your business enters formal liquidation processes. You will also have to prove you did not misuse the BBL funds!

There are many ways available to you. These may include creditor negotiations, refinancing or restructuring operations.

As we’ve said before, don’t ignore repayments. The sooner you deal with the issue the better. Seeking advice to help you restructure and deal with the debt can help.

Free SME Debt Book to download

Guidon Group has teamed up with debt specialists Bell & Company to offer a free guide which you can download by clicking here. They will also offer you a free consultation and you can contact us and we’ll arrange it for you.

If you want to talk about your business finances, you can also contact us, or book a free discovery call.