Businesses 'struggle to repay Covid Bounce Back Loans'
BUSINESSES are struggling to repay Bounce Back Loans (BBLs) five years after the pandemic, a Bournemouth-based insolvency practitioner has said.
These loans, introduced by the Government in May 2020, were crucial for many during the Covid 19 crisis.
However, for some, the repayment journey has been tough.
Elaine Wilkins, director at Antony Batty and Company Licensed Insolvency Practitioners, said: "The Bounce Back Loan scheme was a vital support during the pandemic, but five years on, we are seeing many local businesses struggling to meet repayment obligations."
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Government data shows more than 1.4 million businesses borrowed a total of £46 billion through the BBL scheme.
About 70 per cent of these loans have been fully repaid or are on track for full repayment.
However, nearly 30 per cent of borrowers have faced difficulties, with loans in arrears, in default, or settled by the Government Guarantee due to liquidation or financial hardship.
For those struggling with repayments, the Government introduced the Pay As You Grow (PAYG) scheme, which offers options such as extending the loan term to 10 years, payment holidays, or interest-only payment periods.
More than a third of BBL recipients have used at least one of these options.
Ms Wilkins highlighted the importance of seeking help early.
She said: "We frequently work with business owners who are navigating tough financial situations.
"The key is to explore solutions like restructuring or formal turnaround procedures, such as administration or a company voluntary arrangement, before considering liquidation as a last resort.
"Transparency and early action can make a significant difference."
There are also concerns about liability.
Company directors who can't repay their BBLs usually aren't personally liable, as long as the loans were obtained and used properly.
However, fraud or misuse cases have led to severe consequences, including disqualification and, in some cases, criminal charges.
In 2023/24, more than 800 directors were disqualified for BBL scheme abuse.
Ms Wilkins said: "These are tough times for many businesses, especially with an outstanding BBL to repay, but with the right support and strategies, it's possible to find a way forward."
Antony Batty and Company continue to support businesses, offering professional advice to help navigate financial challenges.
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