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Sole Trader / Bank Account BBL Loan query

Bounce Back Loan liability for a non-profit Association - was this incorrectly given out? Help

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Situation:

The association treasure applied for BBL with Lloyds. This was paid into a Lloyds Treasurer's Account. The association is now struggling with overheads, but it looks like the treasurer is being liable alone for the BBL. The treasurer account seems to be a sole trader, it's not a Ltd co. 

 

As the association is non profit, we wonder if the bank has paid out incorrectly. They admit the BBL is not for charities or non-profit, and will be "looking into it" . Two follow up calls and still no escalation. 

Help needed please. 

 

Replies (16)

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By Paul Crowley
28th Jun 2022 22:23

What happened to the money?
Real issue to be concerned with is whether if was an inappropriate application for a loan
Did the 'association' approve the application?
What legal entity is the association?
Sounds as if the 'association' is throwing the treasurer under the bus
BB Loans were loans. Not free money. All parties knew that. Vital thing is who borrowed the money? Sounds like what you describe as a sole trader.
As in the loan and bank account in the name of the treasurer.
Maybe he should empty the account by repaying the bank.

How could the bank be at fault here?
How can this 'association' have overheads and no income?
The loan was for a mere 25% of trading income in a specific year

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Replying to Paul Crowley:
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By Dw01
28th Jun 2022 23:21

Paul Crowley wrote:

What happened to the money?
Real issue to be concerned with is whether if was an inappropriate application for a loan
- The association (or members club) applied for it genuinely, and used the loan to relocate to a new leased premises.

Did the 'association' approve the application?
- Yes.

What legal entity is the association?
- Good question. It isn't registered as a charity, nor a Ltd company. It is registered with the local council as a private members' club, and has a history of trading and operating as a members club (a martial arts / sports association).

Sounds as if the 'association' is throwing the treasurer under the bus
- Indeed. Each committee member is willing to accept their liability, however, from the bank's point of view they seem to be holding only the treasurer as the person responsible.

BB Loans were loans. Not free money. All parties knew that. Vital thing is who borrowed the money? Sounds like what you describe as a sole trader.
- It appears to be a sole traders account, however, it is certainly what Lloyds call a 'treasurer's account', and those accounts are allegedly only available for non-profits. *Interesting note: The bank's BBL customer care team kept asking whether legal advice had been given before the call. It had not.

As in the loan and bank account in the name of the treasurer.
- Yes. Name is Mr xxx followed by the name of the association.

Maybe he should empty the account by repaying the bank.

- Not the issue.

How could the bank be at fault here?
- Possibly by accepting an application, which seems it's been applied for incorrectly, in the name of the account that they have issued for a non-profit. Meaning, the bank surely should have noticed that the account name & type was a non-profit, and that of a treasurer on behalf of a committee.

How can this 'association' have overheads and no income?
- ?? They do have an income, though a lot less post pandemic, and are subsequently losing members and affiliates.

The loan was for a mere 25% of trading income in a specific year

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By Hugo Fair
28th Jun 2022 22:24

What do you mean by "if the bank has paid out incorrectly"?
Who made the claim? And are you saying that the claim included falsehoods?

And what is your role in all this (i.e. are you the Treasurer? do you hold some other position within the Association? or are you an appointed agent in some capacity?)

And most importantly of all ... what is the question you are asking?

Note: members cannot provide formal advice on a public forum, although may be able to answer specific questions ... but unquantified/unfocussed assistance is not on offer.

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Replying to Hugo Fair:
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By Dw01
28th Jun 2022 23:33

Hugo Fair wrote:

What do you mean by "if the bank has paid out incorrectly"?
- By accepting an application without scrutinising it, and then paying it into what they class as a non-profit treasurer's account designed for non-profit members clubs / associations. Possibly errors on both parties.

Who made the claim?
- The treasurer of the committee.

And are you saying that the claim included falsehoods?

- Falsehoods? Possibly, whether deliberate or accidentally, but this is not what's being questioned.

And what is your role in all this (i.e. are you the Treasurer? do you hold some other position within the Association? or are you an appointed agent in some capacity?)

- I am their landlord and good friend.

And most importantly of all ... what is the question you are asking?

- I am questioning the liability of the BBL, and whether anybody had any experience / knowledge in this area as Lloyds have been absolutely no help whatsover. This was brought to their attention around 4 months ago and several calls later still no reply other than "it's been escelated".

Note: members cannot provide formal advice on a public forum, although may be able to answer specific questions ... but unquantified/unfocussed assistance is not on offer.


- Noted.
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Replying to Dw01:
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By Hugo Fair
29th Jun 2022 08:03

Hugo Fair wrote: "And most importantly of all ... what is the question you are asking?"
OP response: I am questioning the liability of the BBL ... as Lloyds have been no help ... still no reply other than "it's been escalated".

Sorry but, even after a night's sleep, I still don't understand what question is being asked (of the members here or indeed of the bank).

Leaving aside that as "their landlord and good friend" you have no official stake in whatever the issue turns out to be ... what are you hoping will be the outcome of the 'assistance' you seek?
And is that answer related to an attempt to avoid paying back the loan?

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By Paul Crowley
28th Jun 2022 22:28

'Bounce Back Loan liability for a non-profit Association - was this incorrectly given out? Help'
No
It was probably incorrectly applied for
If you look at the application form that will probably be the clincher

EDIT
Hugo beat me to it

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Replying to Paul Crowley:
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By Dw01
28th Jun 2022 23:25

Paul Crowley wrote:

'Bounce Back Loan liability for a non-profit Association - was this incorrectly given out? Help'
No
It was probably incorrectly applied for
- Possibly, yes.

If you look at the application form that will probably be the clincher

EDIT
Hugo beat me to it

Apologies. I posted with the intention of seeking out some sort of help. Unsure why the need to comment to state that you won't help.

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Replying to Dw01:
Stepurhan
By stepurhan
29th Jun 2022 08:50

Dw01 wrote:

Apologies. I posted with the intention of seeking out some sort of help. Unsure why the need to comment to state that you won't help.


They are not saying they won't help. They are saying that the BBL was not incorrectly given out. That is to say, the bank won't have made the mistake, which is what you seem to be hoping is the case. The bank will have issued the loans based on application forms that were incorrectly completed.
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Replying to Dw01:
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By Paul Crowley
29th Jun 2022 10:04

?
' Unsure why the need to comment to state that you won't help.'
Did I say that?

I advised that the application form needs to be reviewed. Who applied for the loan and were they either trading or in business?

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the sea otter
By memyself-eye
29th Jun 2022 08:45

The bank won't be 'in error' there was no requirement for Banks to perform any checks as the whole thing was rushed out with HMG guaranteeing these 'loans'. You will find the members/trustees/committee (pick any one from the above) will probably each be liable for the full amount of the loan.
If I were you I would disengage from this - it will get nasty

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Replying to memyself-eye:
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By Hugo Fair
29th Jun 2022 09:51

Fortunately, OP is only their "landlord and good friend" - so no need to 'disengage' ... but I concur with your final 4 words of prediction.

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Replying to Hugo Fair:
the sea otter
By memyself-eye
29th Jun 2022 11:08

I meant 'run a mile'..... metaphorically speaking :)

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By lesley.barnes
29th Jun 2022 10:03

The bank will most likely ask for the loan to be repaid in full, from whoever applied. It isn't clear from your post how much money was borrowed, whether the treasurer applied for the loan without agreement from the committee, where the money went - treasurer personally or association, who has spent the loan and what is left. You talk about the treasurers account being a sole trader - is this the personal account of the treasurer or the associations account. You would need to do more digging into the circumstances. All this will be taken into account when the bank looks at recovering the loan. If you google not paying back bounce back loan there are lots of articles on the internet. I agree with the above, you might want to step back, this will get nasty as everyone seeks to distance themselves.

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paddle steamer
By DJKL
29th Jun 2022 11:31

Sounds like an unincorporated association.

Generally with these I would expect all members to be equally liable to any creditor.

Whilst the bank is apparently after the treasurer I suspect he has a counter claim against all the members for their "shares" of the loan

Often, with these beasts, things are solely in name of office bearers, for instance the titles to the properties my fishing club owns are vested in various office bearers but they hold on behalf of the members, this loan sounds similar.

One for a solicitor, methinks.

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By Paul Crowley
29th Jun 2022 11:40

This is as I see the position
Applicant claimed that they were in business on the application form
If true then the bank lent to the applicant on that basis
Bank did nothing wrong

The entity does not have limited liability status and therefore the loan needs to be repaid

Having escalated matters I would expect bank to look for early repayment
Insolvency is the only solution if the applicant cannot make the repayments

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