What does having a BBL mean for business owners?

Last post: Jan 13, 2023

The Bounce Back Loan was widely taken up by businesses during the pandemic. It was quick and it was cheap, it also felt that with no PG and backed by the Government it was a no brainer! But, in the aftermath of COVID and now reality is setting in, what does having a BBL mean for business owners? We asked Ian Robert, IP at Moore Kingston Smith, how the British Business Bank was reacting to businesses going into

When Bounce back loans ( BBL) were announced by the government in May 2020 at the start of the pandemic the fanfare was loud and, unsurprisingly, virtually every business owner applied. There were over 1.6m loans and over £80bn handed out in loans (mainly BBL and Coronavirus Business Interruption Loans 'CBILS'). Around £4bn is estimated lost to fraud!
The process was rushed, there was no due diligence and little attention to the small print.
Did you know….?

  1. that only one BBL was allowed to be taken out per business owner, so just one per group of companies
  2. The the loan had to be repaid if you later took out a CBILS loan
  3. That the funds had to be used for business operational purposes.

Many company directors saw this as cheap unsecured debt (correctly) but took out the loan without worrying about its use or how to pay it back.
It's not rocket science to realise that this is still a loan and needs to be repaid. Improper use of the loan is being followed up and in many cases, if it's not repaid and the company goes into liquidation, the liquidator will require it to be repaid. If it was used for improper purposes, the director will have been guilty of misfeasance and the liquidator would look towards the directors' personal property to recover the debt, for the benefit of creditors. If the loan was used for valid operational purposes, no claim could be made and the director would be able to hide behind the corporate veil.
The Insolvency Service has been contacting all liquidators across the UK making them aware of every BBL that exists in their portfolio of formal appointments and requiring that they follow up and investigate.
If you have taken out a BBL and can't repay it, seek advice from a reputable Insolvency Practitioner who will advise you as to your fiduciary duties and work with you to take steps to mitigate your personal risk. It's important to seek help. Don't ignore it as it will catch up with you and the sooner you face it head on, the better.