Companies throughout the UK have been struggling to stay afloat since the pandemic began. Many needed a quick injection of cash to keep their heads above water, so the government decided to introduce a series of measures to help solve their financial problems in 2020.
One of these schemes the British government brought into action during the first year of the pandemic was the Coronavirus Business Interruption Loan Scheme, better known as CBIL. It was specifically designed to help out businesses within the UK who found themselves losing revenue during these challenging times. Without these types of schemes, several British companies would not have been able to survive due to their cash flow problems. New applications are no longer available after the government decided to stop the scheme at the end of March 2021.
The scheme has proved highly beneficial for those who were able to get their business back on track, but several small companies have found it difficult to pay back the amount they borrowed. Let’s take a closer look at what you can do if you have been struggling to pay back what you owe.
What do you do if you KNOW you can’t pay the CBILS loan back?
If you are sure you can’t pay back the emergency loan, you are not the only one. The government claims that almost half of the issued CBILS loans will never be repaid, which will eventually cost the United Kingdom Treasury billions of pounds.
The first thing you should do instead of tackling the issue yourself is to get professional help. A reputable financial company that understands how CBILS loans work will be able to provide you with professional advice on how to solve the issue. Their employees will do whatever it takes to rescue your firm from going under.
These financial experts often tell their clients to avoid running down the CBILS money they have been given until there is no finance available to pay creditors, no money to pay staff members’ wages, or no cash left to cover the cost of liquidating the company.
When the government brought in these schemes, they were fully aware that some company directors would struggle when it came to making the repayments. If you are in this situation, it’s not the end of the world, especially if you have acted reasonably and responsibly since you applied for the loan.
Will it damage my credit rating?
It seemed like everyone tried to predict how long the pandemic would last, especially company directors whose businesses had been affected by the virus. During the early stages, lots of folks thought their companies would start generating a profit shortly after the country went out of lockdown, which is why they weren’t worried about taking the loan at the time. However, many continued to struggle for a much longer period and found that they couldn’t afford the repayments.
Borrowing is extremely important for a lot of businesses, and bad credit history can have a devastating impact on the company because they fail to convince future lenders that they can make repayments. Just like any other loan, the CBILS loan can give you a bad rating.
Is dissolving the company a possible solution?
Unfortunately, dissolving the company is not an option. If you try to dissolve the company, you can expect The Insolvency Service to investigate the case. The person who has borrowed the money will remain fully liable for the debt. Most banks that have issued the loans follow the commercial recovery procedures that are in place.
It is of vital importance that you read the terms and conditions of the loan. If you think you can get away without paying the loan by dissolving the company, you can expect them to bring you to court. This won’t just damage the company, but it could cause problems for you on a personal level too.
The only way the debt could be written off is if the company is liquidated. If this is the case, the company will be forced to shut its doors, and the remaining debts will be either repaid or perhaps written off.
Borrowing money can be a daunting experience for business directors, especially during these unprecedented times. Nobody could have predicted the impact the pandemic would have on all types of businesses. Trying to make repayments hasn’t been easy for a lot of companies, but if you think it’s impossible to pay back the lenders, speak to a professional before making any drastic decisions. There are experts throughout Britain assisting hundreds of companies in the same position, so don’t hesitate to get in touch with them. Over one hundred thousand companies were granted these emergency loans in 2020 and 2021, and the banks and the government predicted a lot of those who borrowed would struggle to pay them back.