Bounce Check - Can You Pay Your Covid Loan?

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Businesses that took out bounce back loans may find it tough to repay them - and might ultimately go bust. Recent research says this could cost the country £billions.

Builders, fitters and other construction industry businesses are the second highest borrowing sector after the retail sector, obtaining a collective £7 billion through the Bounce Back Loan Scheme (BBLS).

The construction sector also saw the most individual loans taken out with over 238,000 bounce back loans being supplied to various businesses.

The construction industry could cost the Treasury £4.6 billion in business and self-employed defaults - at the highest estimate of defaults. Business Rescue Expert has delved into all industry sectors to reveal how small businesses in each sector have embraced the BBLS -  how much has been borrowed, by whom and what the recipients have done with the funds. Their recent study found that the BBLS could cost the treasury £27 billion - with the losses equal to the cost of building up to 23 Wembley Stadiums.

 “The figures illustrate not only the size of the support measures that were available to businesses to borrow during the pandemic lockdown but also the potential cost if they can’t be repaid.”

– Chris Horner 

Insolvency director, Business Rescue Expert

Bankruptcy

“In the first quarter of this year alone, over 42% of the liquidation cases we’ve handled had taken out a bounce back loan and the average amount borrowed averaged £37,500 per company," continues Horner.  “As the first loan payments for the BBLS come due, businesses will have to seriously look at their ability to pay.

“Businesses that have topped-up their initial BBLS loan will also find out that not only are they unable to defer these payments but they’ll come out at the same time as their original loan repayments – an unwelcome and expensive surprise."

Options available

Horner adds: “The most important thing we can is to remind business owners and directors that there are options available for them. If they get professional advice and quickly then they could yet find a way out of a seemingly impossibly tight situation. Ignoring it is only guaranteed to add to their problems.”

Picture: Can you repay your bounce back loan?

Article written by Cathryn Ellis
28th May 2021

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