Struggling Small Business with BBL

[Aamax]

I am new here and stumbled across the site via a google search and have been looking through the threads and have the same issue as many it seems.

I started a small business in 2018 alongside a full time job and the business was doing quite well, nothing massive but a decent side hustle. However I am now in a position where the business is still live, around 1k left in the business account but not bringing in any sales (hasnt for months) so is pretty much active in name only. The business currently has a small amount of stock, nothing to write home about and the only debt the business has is a BBL loan which currently sits at 19k and I know the business only has enough to cover 2 payments at the most until I have to look at potentially personally covering this (around £400) which I just cannot afford.

I contacted the bank back in August and explained that the business hasn't bounced back, sales are non existent and that I was in a really dark place worrying about what will happen when the pot dries up. they gave me 30 days breathing space, which I didn't need as I wasnt being chased and since then I have had no contact from the bank and I kind of buried my head in the sand until now and i am panicking.

I incorrectly assumed the loan amount was based on the financial year of 2019/20 so my figure submitted for the loan was June 2019-May 2020 (I didnt get the bounce back loan until August 2020) which was higher that the 2019 calendar year total (I read somewhere this morning it should have been based on calendar year and not financial) I am worrying I could end up with a criminal conviction due to this oversight and I cant sleep.

I know I have not done anything intentionally wrong, but I am that person who always thinks I will have the book thrown at me and thinks of the worst scenario!! My accounts are all up to date, DLA has been paid back in full last year.

I can personally cover some of the loan with a repayment plan, which I am happy to do as I took the loan out but are the banks likely to do this at a reduced rate??

 

[Lisa Thomas]

You are not personally responsible for the BBL unless you have committed fraud.

You can consider dissolving the company (I know someone who can help you with this, if the accountants can not) or liquidate it, which comes at a cost.

Happy to talk in more detail if you want to reach out to me.

 

[Lisa Thomas]

More info here: https://youtu.be/xFRHNDqBvh0?si=LbJ9uldTfH-eUIQ7

 

[Aamax]

You are not personally responsible for the BBL unless you have committed fraud.

You can consider dissolving the company (I know someone who can help you with this, if the accountants can not) or liquidate it, which comes at a cost.

Happy to talk in more detail if you want to reach out to me.

Thanks Lisa, I don't believe I intentionally have but the whole turnover dates (calendar/financial year) have got me panicking, there was a difference in the turnover from calendar to financial year which meant I was able to secure a bigger BBL. I dont want to get into any trouble and would prefer to pay this back personally but was wondering if any of the banks have been forthcoming in taking reduced monthly payments to pay the loan off.

 

[Porky]

@Aamax pick the phone up and chat to @Lisa Thomas she deals with thousands of these. Seriously, stop over thinking this, if you cant pay it you cant pay it. no point in entering into extended payment terms its a business debt not a personal one. The issue you will have is paying for an IP as the average cost is about £5k unless you use the sponge bob method but really you could do with professional guidance.

But please stop worrying, this is no big deal, its not insurmountable it will be sorted, there are so many people in your position that used estimates on that scheme, you paid some back, business changes, the business has to close, nobody sets out to fail, you close, bank takes a hit in the scheme along with millions of others in the same position and that's the end of it, stop stressing,

 

[Lisa Thomas]

Thanks Porky

 

[Tornado220]

@Aamax pick the phone up and chat to @Lisa Thomas she deals with thousands of these. Seriously, stop over thinking this, if you cant pay it you cant pay it. no point in entering into extended payment terms its a business debt not a personal one. The issue you will have is paying for an IP as the average cost is about £5k unless you use the sponge bob method but really you could do with professional guidance.

But please stop worrying, this is no big deal, its not insurmountable it will be sorted, there are so many people in your position that used estimates on that scheme, you paid some back, business changes, the business has to close, nobody sets out to fail, you close, bank takes a hit in the scheme along with millions of others in the same position and that's the end of it, stop stressing,

whats the spongebob method

 

[Spongebob]

CLOSING A LIMITED COMPANY WTH INSUFFICIENT FUNDS WITH WHICH TO PAY AN INSOLVENCY PRACTITIONER

CLOSING AN INSOLVENT LIMITED COMPANY WITH INSUFFICIENT FUNDS WITH WHICH TO PAY AN INSOLVENCY PRACTITIONER If a company is unable to carry on trading due to becoming insolvent the standard procedure for closing it down is for the directors to appoint an Insolvency Practitioner to liquidate it...

www.ukbusinessforums.co.uk

 

[Spongebob]

The Spongebob Plan has proved to be the perfect way of dealing with a Bounce Back Loan owed by an insolvent company.

 

[Tornado220]

The Spongebob Plan has proved to be the perfect way of dealing with a Bounce Back Loan owed by an insolvent company.

How is it better than a liquidation ?

 

[JEREMY HAWKE]

The Spongebob Plan has proved to be the perfect way of dealing with a Bounce Back Loan owed by an insolvent company.

The government will honour its covid agreement with the banks when the banks have explored all recovery avenues
This could included going after the directors using various methods available to them .
Not all of these cases on UKBF are those of properly run company's and quite a few could easily be classed as trading while insolvent. In fact those that are in difficulty quite often display a track record of poor management
Always use an IP unless you really dont have anything to lose personally

This site has a stigma with this plan and its is one of the biggest topics on here
The members and the owners have to decide if they want to be recognised for dome and gloom and the economics of the shoe shiner

Personally I want to see more people that are doing well not constant "poor me I'm going bust"

 

[UK Contractor Accountant]

The dissolution plan doesn't work for companies with a BBL in place at the moment.

Companies are being left in limbo until such time as the blanket hold is lifted. The BBL lenders have to pursue the debt for at least 12 months after issuing the default notice before they can claim on rhe Guarantee.

 

[japancool]

This site has a stigma with this plan and its is one of the biggest topics on here
The members and the owners have to decide if they want to be recognised for dome and gloom and the economics of the shoe shiner

Personally I want to see more people that are doing well not constant "poor me I'm going bust"

Personally, I'd like to see more people ask for help much earlier. Ask for help when you realise you are starting to struggle, not wait until the situation is irrecoverable. And I'd also like to see people actually take some of the advice they've been given.

And I realise that's all very easy to say with hindsight, but too many people dig themselves into bigger holes than they need to be in, and then have to resort to the plan.

 

[Tornado220]

The dissolution plan doesn't work for companies with a BBL in place at the moment.

Companies are being left in limbo until such time as the blanket hold is lifted. The BBL lenders have to pursue the debt for at least 12 months after issuing the default notice before they can claim on rhe Guarantee.

I'm pretty sure I was careful about the 25% but to a layman it was not or at least didn't appear to be all that clear, much like every other government document, however now my accounts are a mess, I cannot access

Personally, I'd like to see more people ask for help much earlier. Ask for help when you realise you are starting to struggle, not wait until the situation is irrecoverable. And I'd also like to see people actually take some of the advice they've been given.

And I realise that's all very easy to say with hindsight, but too many people dig themselves into bigger holes than they need to be in, and then have to resort to the plan.

What I would like to see is real help that is actually useful and I mean from the government with things like advice in how to run a business, how to miss the traps and pitfalls that it appears an awful lot of small / micro businesses fall into !

 

[japancool]

What I would like to see is real help that is actually useful and I mean from the government with things like advice in how to run a business, how to miss the traps and pitfalls that it appears an awful lot of small / micro businesses fall into !

What traps and pitfalls did you have in mind?

If you're looking for advice on running a business, the government are the last people you should rely on for advice. Most of them can barely run a bath, never mind a business.

 

[Mark T Jones]

What I would like to see is real help that is actually useful and I mean from the government with things like advice in how to run a business, how to miss the traps and pitfalls that it appears an awful lot of small / micro businesses fall into !

I wish you well @Tornado220 - and I'm sure the advice given will help you.

On this point however, I absolutely disagree with you.

There is mountains of help, support and advice out there. Unfortunately there is also quite a lot of nonsense and misadvise. As with many things, the skills is in deciphering which is which.

Dot Gov - gives all the hard facts you need, albeit in a load of turgid prose. Sites like this are goldmines of information, if you choose to ask and, most important, properly listen & evaluate answers.

I see 2 big problems:

1. Human nature - people see what they want to see and interpret things to their own advantage - and there are always snake-oil merchants happy to tell you what you want to hear.

2. Getting political - low barriers to entry. The Government have chosen to treat self-employment / business-ownership or, to make it prosaic 'entrepreneurship' as a cheap and easy job creation scheme. (having worked on the NEA, it was always murmured that it was essentially fudging the jobless numbers).


You have several possible routes forwards. Running a business is both toughest and potentially most rewarding. Exactly as it should be.

 

[Spongebob]

The dissolution plan doesn't work for companies with a BBL in place at the moment.

Companies are being left in limbo until such time as the blanket hold is lifted. The BBL lenders have to pursue the debt for at least 12 months after issuing the default notice before they can claim on rhe Guarantee.

The Spongebob Plan is not a "dissolution plan".

The primary objective of the Spongebob Plan is bring about the orderly liquidation of an insolvent limited company where there are insufficient realisable assets with which to appoint an insolvency practitioner.

This involves inviting creditors to wind the company up leading to a compulsory liquidation - usually via the Official Receiver.

If no creditor takes the bait and initiates winding up proceedings, then the company will indeed sit in limbo until Companies House strikes it from the register - normally for non-submission of annual returns or Confirmation Statement. This is the secondary objective of the Plan.

Proactively applying to Companies House to have the company dissolved via DS01 has never been part of the Spongebob Plan. It has always been my preference simply to allow events to take their natural course and for Companies House to dissolve the company of their own volition.

Currently Companies House are not dissolving companies where an objection has been received from a bank who are owed money through a Bounce Back Loan. All this means is that the company will sit in limbo for a little longer than previously experienced. It does not impact the directors in any way. They are perfectly free to go about their lives completely unfettered. Unless fraud has been committed they have absolutely nothing to worry about.

The Spongebob Plan most certainly does work for companies with a BBL in place.

If a director cannot bear the thought of their insolvent company sitting in limbo indefinitely the solution is simple - find the money with which to pay an insolvency practitioner. Personally, I'd have no problem just forgetting about it and getting on with the rest of my life comfortable in the knowledge that I had conducted myself completely within the law.

 

[UK Contractor Accountant]

Currently Companies House are not dissolving companies where an objection has been received from a bank who are owed money through a Bounce Back Loan. All this means is that the company will sit in limbo for a little longer than previously experienced. It does not impact the directors in any way.

Apart from the obligation to file Accounts & Docs whilst still active on the Register.

That's the problem here - companies have been in limbo for 2+ years now. Their Statutory obligation to file docs still remain in place.

 

[Spongebob]

Apart from the obligation to file Accounts & Docs whilst still active on the Register.

That's the problem here - companies have been in limbo for 2+ years now. Their Statutory obligation to file docs still remain in place.

i have never heard of Companies House taking any action against companies not filing returns in such circumstances - other than dissolving them!

Anyway, there is nothing to stop directors of an insolvent company "in limbo" from resigning. There would then be nobody to file any returns.

 

[Tornado220]

The Spongebob Plan is not a "dissolution plan".

The primary objective of the Spongebob Plan is bring about the orderly liquidation of an insolvent limited company where there are insufficient realisable assets with which to appoint an insolvency practitioner.

This involves inviting creditors to wind the company up leading to a compulsory liquidation - usually via the Official Receiver.

If no creditor takes the bait and initiates winding up proceedings, then the company will indeed sit in limbo until Companies House strikes it from the register - normally for non-submission of annual returns or Confirmation Statement. This is the secondary objective of the Plan.

Proactively applying to Companies House to have the company dissolved via DS01 has never been part of the Spongebob Plan. It has always been my preference simply to allow events to take their natural course and for Companies House to dissolve the company of their own volition.

Currently Companies House are not dissolving companies where an objection has been received from a bank who are owed money through a Bounce Back Loan. All this means is that the company will sit in limbo for a little longer than previously experienced. It does not impact the directors in any way. They are perfectly free to go about their lives completely unfettered. Unless fraud has been committed they have absolutely nothing to worry about.

The Spongebob Plan most certainly does work for companies with a BBL in place.

If a director cannot bear the thought of their insolvent company sitting in limbo indefinitely the solution is simple - find the money with which to pay an insolvency practitioner. Personally, I'd have no problem just forgetting about it and getting on with the rest of my life comfortable in the knowledge that I had conducted myself completely within the law.

What do you do when CH tries to strike it off but HMRC blocks it ?

 

[Tornado220]

What traps and pitfalls did you have in mind?

If you're looking for advice on running a business, the government are the last people you should rely on for advice. Most of them can barely run a bath, never mind a business.

You are 100% correct there, sorry just venting frustration, that they can take someone to court who cannot afford representation, sometimes we are alone, and with more stress comes less time to research and investigate the correct route and alas situations arise that all too suddenly become major issues, its the way it is

 

[UK Contractor Accountant]

i have never heard of Companies House taking any action against companies not filing returns in such circumstances - other than dissolving them!

Where have you looked?

You are confident that no Director has ever been prosecuted for not keeping proper books & records and complying with their Statutory obligation to file Accounts & Confirmation Statements?