Bounce Back Loans (BBLS) were introduced in March 2020 to help out struggling businesses. This period was the start of the first lockdown, which was a tough time for many business owners, particularly those who worked in sectors such as hospitality.

Essentially, the Government offered loans, with quite relaxed eligibility criteria to businesses to help them through the pandemic.

The loans ranged from £2,000 to £50,000. However, the amount that you could borrow was capped at 25% of your turnover from the previous year, or your estimated turnover.

Businesses which didn’t borrow the full amount could also “top-up” their initial loan. The minimum amount you could add to the initial loan was £1,000.

Bounce Back Loans were completely backed by the state and required no repayments or interest within the first 12 months. After 12 months, banks charge a fixed 2.5% annual interest on top of their initial loan.

The Bounce Back Loan Scheme gave out £ 47 billion, helping millions of people in a time of crisis.

If you can’t pay your Bounce Back Loan there are options available to you to help with your repayments. One of these options is to utilise the Pay As You Grow scheme (PAYG).

The PAYG scheme was designed to offer a little bit of wriggle room for those who might not be completely on top of their payments. Making repayments might still feel like a step too far for many businesses, so this scheme aims to alleviate some of the pressures.

We’ll explain how the PAYG scheme may be able to help you in the next section. We do need to look at other intricacies of the loan first though.

One of the main benefits of the Bounce Back Loan Scheme was the fact that the loan itself was unsecured. This means that the loan was taken out without any collateral such as property.

We wouldn’t necessarily advocate unsecured loans but, in this instance, it might have been beneficial. The Bounce Back Loan comes with a government guarantee because they gave 100% security to the banks for these loans.

However, government backing only comes into play if a business is declared insolvent, so a trading business that is still in operation will still have to pay the money back themselves.

Therefore, while company directors should feel a little relief, they should also be aware that governmental intervention is very much the last-case scenario. Businesses will still be expected to make repayments unless the situation gets very desperate.

As noted at the start, many businesses will see the BBLS as an opportunity to invest in their future. With this in mind, if you’re struggling to repay, you might be able to come to an arrangement with HMRC.

These are called Time to Pay (TTP) arrangements. You could be granted an additional 12 months to keep on top of your payments if you are able to put together a convincing cash flow forecast, highlighting where you believe you’ll be making your profit.

Some businesses may be juggling a series of loans alongside their BBL and, in that instance, a Company Voluntary Arrangement (CVA) could be the best solution. The CVA will allow a debtor to make a single monthly payment towards creditors for a set number of years.

Only a licensed insolvency practitioner can sanction your CVA and it will also have to get the consent of your creditors. You will need to provide a thorough plan that your creditors can get behind.

For confidential advice and support with your Bounce Back Loan, call our free phone number 0800 088 2142 and one of our trained experts will be happy to help.