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Advising clients on repayment options for BBLS?

As initial payment holiday comes to an end, are you advising clients as to their options?

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As I'm sure you all know, the BBLS closed to new applications and top-up applications on 31 March 2021.  However, many clients may have forgotten that the initial holiday (when no repayments had to be made) was only for 12-months from the start of the loan ... so making those first repayments will recently have become due (or be about to be so).

Not all of them are likely to be aware that they can choose to use the government's Pay as You Grow initiative, which gives firms the option to: extend the length of their loan from six to ten years; make interest-only payments for six months; or pause repayments entirely for up to six months.  But these options are not an automatic 'right', the businesses has to ask the lender (bank) for more time to repay their BBLS loans via one of those options.

Although the Federation of Small Businesses (FSB) has urged banks to contact their customers 'in order to make them aware of Pay as You Grow' (and how to make best use of it), it might be a conversation best initiated by you - before either your client is confused by messages from the bank, or simply leaves it too late?

 

Replies (15)

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Slim
By Slim
24th Jun 2021 14:16

I've given then ones who took it a heads up and a few links

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By Carolynne
24th Jun 2021 14:36

I had a client who asked for the extension of 6 months, and when the first payment would have been due, the bank took the funds out of their account. When they phoned up, the bank said it was an error, but they had no way of returning the first payment back to them now it has hit the loan account, but would not take it again. My client has intimated this bank has done it to quite a few people.

He put the request in and received a 'your request is being looked into' but got nothing further, so my advice to clients is chase the bank for a definite response that the 6 months grace has been given.

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Replying to Carolynne:
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By Hugo Fair
24th Jun 2021 17:12

I certainly endorse the advice in your last sentence - but would stress that they must get it in writing.
It never ceases to amaze me how many people are so relieved to hear, in this case, that they've been given another 6-months before starting repayments ... and forget that this is a variation to the Agreement they've signed, so also needs to be signed-off.

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Lisa Thomas
By Insolvency Practitioner
24th Jun 2021 16:06

I am taking regular calls from directors whose companies cannot pay back the BBLs and need insolvency advice.

It's surprising how many Directors took a sizeable chuck (or even all of) the money back out of the company for personal use and don't understand that it amounts to a DLA they may need to repay and also that the transaction/s may amount to covid fraud...

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Replying to Insolvency Practitioner:
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By sanjay100
24th Jun 2021 16:48

This isn't a surprise. I would be interested to know how the government will deal with thousands of such cases where Directors think they won a £50K lottery. Perhaps just brush it under the carpet as there are just too many case to deal with.

What happens if a newly incorporated company takes out a 50K Bounceback loan and tries to strike off the company. Will the bank object to the strike off.

Secondly are insolvency practitioners taking such directors to task. In the past, I have seen insolvency practitioners only interested in their fees and not gone after the director with a large overdrawn director loan accounts.

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Replying to sanjay100:
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By Hugo Fair
24th Jun 2021 17:06

I can't speak for Insolvency Practitioner (whom I'm sure you weren't including in your lower-case group of practitioners) ... but, Yes, the banks are likely to object to any attempted strike-off applications where the company has an outstanding BBLS.

There have been some cases of this happening already (although by definition I don't know how many instances they may have missed) ... but it looks like they're employing people to scan the applications and cross-check with their loan books.

Frankly that's the least they'll have to do to meet the "all reasonable attempts" (or whatever the exact wording was) of the criteria they have to meet regarding their efforts to gain repayment, if they want to call upon the govt as guarantor.

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Replying to Hugo Fair:
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By Paul Crowley
24th Jun 2021 17:21

Only company that I know that has tried is a former client.
New agent submitted the form, with accountants name and address on the presenter details.
Objection far quicker than I would have expected.
New agent chose not to submit accounts to Co house or HMRC
Too much s455 tax and directors loan showing up.
All before Covid stuff, so directors loan now at least £80,000

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Replying to Hugo Fair:
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By sanjay100
24th Jun 2021 18:11

The Director may well then leave the company dormant for ever. The Director have no idea about DLA implications and can file any set of accounts and tax returns. Who will know and who will care ?

If a director has no assets then chasing repayment it will be throwing good money after bad. Unlikely government will instigate criminal proceedings unless there have been for example multiple applications.

Sorry I need to calm down.

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Replying to sanjay100:
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By Hugo Fair
24th Jun 2021 18:47

I understand why it gets to you ... and working out (personally) how to stop that is probably essential.

But my original Post wasn't meant to be yet another way of winding-up those of you who take a jaundiced view of the whole shenanigans, or who have clients who have neither the will nor the ability to repay the loan.

I was simply trying to flag up that there will be lots of clients who honestly want and intend to repay it, but who find themselves less able to do so immediately (as per the terms of the Agreement) ... due to subsequent lockdowns et al.
And it these clients who may need a heads-up rather quickly (even if you 'warned' them months ago).

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Replying to Hugo Fair:
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By Leywood
24th Jun 2021 20:07

^^^agree. A timely reminder to everyone Hugo. I've reminded all of mine already (most of them twice), just as I did with the vat deferment as a lot can happen in 6mths and I know most of mine appreciate such things.

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Replying to sanjay100:
Lisa Thomas
By Insolvency Practitioner
28th Jun 2021 09:30

New (retrospective) law is now being passed giving the Insolvency Service the power to investigate directors of dissolved companies, without the need to reinstate the Company.

It will be interesting to see whay comes of it.

Many, of course, will continue to get away with not repaying (or even declaring) their DLAs but in due course this will be clamped down on.

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Replying to Hugo Fair:
Lisa Thomas
By Insolvency Practitioner
28th Jun 2021 09:29

We are hearing on the grapevine that the government are not accepting dissolution as 'all reasonable attempts' to collect in the BBL.

If this is correct, we are expecting to see a deluge of Banks liquidating companies in order to go cap in hand to the government for repayment under the guarantees....

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Replying to sanjay100:
Lisa Thomas
By Insolvency Practitioner
28th Jun 2021 09:26

Yes, we have a duty to carry out a statutory investigation into the Directors conduct and report misconduct to the Insolvency Service. In addition, BBL fraud is reported to HMRC.

It has nothing to do with our fees.

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Replying to Insolvency Practitioner:
Slim
By Slim
28th Jun 2021 10:56

Is there really enough capacity for IP's to take on all this work.

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By AdamMurphy
24th Jun 2021 21:32

No, banks themselves have been contacting borrowers explaining the options available.

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