Goodbye to the Bounce Back Loan

Application for the government-backed Bounce Back Loans are now closed.

Over the next few days, I’m going to answer the questions that people have about what happens to bounce back loans when closing your company.

Today’s questions:

‘Can I strike off or dissolve my company if it’s taken a Bounce Back Loan?’

Thousands of business owners in the UK are waking up to the fact that their business will not survive and the bounce back loan was not enough to help their business bounce back. So, what happens to a bounce back loan if a company is dissolved?

With the cost of liquidation for a small company costing on average £5,000 lots of directors are thinking can I simply strike the company off. With money tight, it’s a fair question to ask.

As I’ve mentioned in previous videos, striking off is meant for company’s with no debt, and if you plan to strike the company off with debts you must write to your creditors to inform them.

If you attempt to strike your company off the register, the bank who lent you the Bounce Back Loan will be informed and they will object to the strike off.

The government may have guaranteed the loans but the banks are responsible for collecting them in, they’re not going to allow companies to be struck off.

If your company does get struck off with a bounce-back loan, the company is likely to be reinstated and it can be reinstated at any point in the future.

In the Companies Act there is a law that states:

“Even if a company is struck off, the liability (if any) of every director, managing officer and member of the company continues and may be enforced as if the company had not been dissolved“

In short, a bounce back loan and dissolved company do not go hand in hand. You will not be able to use the striking off method if you have taken a bounce-back loan.

If your advisers are telling you any different about this, it’s time to get new advisers. If you took a bounce back loan and now want to close your company, please seek advice early on the best way to achieve this outcome based on your personal circumstances. 

In the next video, I’m going to talk about liquidating a company with a bounce-back loan.

Please ask me any questions either In the comment or DM me as I know this is a cause for concern for many people right now.

All the best,
Chris,
1st Business Rescue

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