CBILS Issues
To help support businesses affected by the Covid-19 pandemic, the Government gave out generous support loans. The Coronavirus Business Interruption Loan (CBIL) schemes provided £79.3 Billion to struggling UK businesses.
The time has now come where repayments are coming into effect. If you are worried about how you are going to meet payments, you are not the only one.
If You Can’t Repay Your CBILS Loan
Your business liability
There was a lack of due diligence when the Government implemented the CBIL schemes. As a result, many ‘unviable’ companies have received loans.
If your company cannot pay back this loan, there should not be consequences if you have acted “reasonably and responsibly”.
Remember that if you cannot pay back your loan, you risk your credit score could be at risk. This will limit your attractiveness to future lenders or investors in the long term.
Your personal liability
Lenders required personal guarantees on CBILS loans over £250,000. Unfortunately, as a result, these directors are liable. Many thought that ‘government-backed’ meant Government protection. However, this is not the case for personally guaranteed loans.
To recover their money, lenders must demonstrate that they have exhausted all possible recovery channels. This includes options such as liquidation of companies, repossession of assets and even Bankruptcy.
For loans below the value of £250,000, the Insolvency Service can lift the ‘corporate veil’. This could potentially leave the director(s) personally liable.
If you are a sole trader
Unlike company Directors, you do not have the protection of a limited company. As a result, if you default, you are fully liable to repay your loan.
The lender cannot try to repossess your ‘principal private residence or primary personal vehicle’. This means that your home and main vehicle are safe. However, this does not mean your business and other assets are not at risk. Ultimately, your lender can also make you Bankrupt. This in turn puts assets like your home at risk.
You should act quickly to reduce the impact of defaulting on your loan.
Your Options
Cases involving CBILS can be complicated, especially when you factor in other liabilities. Often defaulting on one loan can have a landslide effect. This can result in requests to pay back other debts, potentially leaving you in a tricky situation.
If you cannot pay, it is vital that you act urgently. Delaying will only make the situation worse and can have serious consequences for you and your company.
We recommend consulting with insolvency experts like us to get an accurate understanding of your situation and your options.
Bell & Company have over a decade’s experience negotiating with business creditors, both for company and director’s liabilities.
Additional Resources
Download our Free Guide
This guide contains everything you need to know about the CBIL and BBL schemes. It provides answers to the most commonly asked questions and outlines your options if you can’t pay.