What Happens If I Don’t Pay My Bounce Back Loan?
The Bounce Back Loan Scheme (BBLS) was introduced by the UK government in 2020 to help small businesses that were struggling financially due to the COVID-19 pandemic.
The scheme allowed eligible businesses to borrow up to £50,000, with the government guaranteeing 100% of the loan. While the scheme has provided a lifeline for many struggling businesses, failing to repay the loan can lead to serious consequences.
What happens if you don’t pay?
If a business owner fails to repay their Bounce Back Loan, the first thing that is likely to happen is that the lender will try to contact them to discuss the situation. If the borrower is unable to make repayments, the lender may offer them a payment holiday or agree to restructure the loan to make it more manageable.
However, if the borrower fails to engage with the lender or ignores their requests for repayment, the situation can escalate quickly.
What are the consequences?
The consequences of failing to repay a Bounce Back Loan can be severe. In the first instance, the borrower’s credit score is likely to be impacted. This can make it harder for the borrower to secure credit in the future, such as credit cards, loans or mortgages. It can also affect the borrower’s ability to rent property or secure a mobile phone contract.
If the borrower continues to ignore requests for repayment, the lender may take legal action to recover the debt. This could involve obtaining a County Court Judgment (CCJ) against the borrower, which would be registered on their credit file and could stay there for up to six years. A CCJ can make it very difficult for the borrower to secure credit in the future.
In addition to legal action, the government has also introduced new measures to crack down on Bounce Back Loan fraud. This includes the creation of a new fraud team that will investigate suspected cases of fraud and pursue those responsible. If a borrower is found to have fraudulently claimed a Bounce Back Loan or used the funds for purposes other than their business, they could face criminal charges, including imprisonment.
It’s important to remember that the Bounce Back Loan Scheme is a debt, and failing to repay it can have serious consequences. Borrowers should ensure that they are able to make repayments before taking out the loan and should speak to their lender if they are experiencing financial difficulties. Lenders are required to offer support to borrowers who are struggling to make repayments, and there are a range of options available, including payment holidays and loan restructuring.
In conclusion, while the Bounce Back Loan Scheme has provided a vital lifeline to many small businesses during the COVID-19 pandemic, failing to repay the loan can have serious consequences. Borrowers should ensure that they are able to make repayments before taking out the loan and should seek support from their lender if they are experiencing financial difficulties.
Ignoring requests for repayment can lead to legal action, damage to the borrower’s credit score, and potential criminal charges for fraud. It’s important to take the repayment of a Bounce Back Loan seriously and to seek help if needed to avoid the potentially severe consequences of defaulting on the loan.
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