Sole trader and cannot afford Bounce Back Loan repayments

Personal debt help for Sole Traders with outstanding Bounce Back Loans

The Bounce Back Loan Scheme offered emergency funding for companies and sole traders at the height of the coronavirus pandemic, and was instrumental in keeping many small businesses afloat.

Years down the line, however, what happens if you now cannot afford to keep up with your Bounce Back Loan repayments? Are you personally liable for the outstanding amount?

What happens to sole traders who cannot repay their Bounce Back Loan?

Unlike with limited companies, sole traders have full financial responsibility and personal liability for any debts they take out for business purposes. This includes Bounce Back Loans whereby the liability for repaying the amount borrowed lies solely with the individual. 

Sequestration

If, on the other hand, there’s no possibility of your business continuing, sequestration may be your only choice. This involves appointing a Trustee who sells any assets you hold, and repays your creditors as far as possible. In a similar way to the Scottish Trust Deed, once you’ve been discharged from bankruptcy any unpaid proportion of your Bounce Back Loan is written off.

Seeking professional help is key for sole traders

As a sole trader you’re more exposed to the risk of personal liability for debts incurred by your business when compared to limited company directors who receive some protection in this respect.

It’s vital to obtain professional advice as early as possible if you cannot afford your Bounce Back Loan or any other repayments, as debt can quickly increase when additional charges and interest are applied.

If you’re a sole trader and are struggling to repay your Bounce Back Loan, Scotland Debt Solutions can help. We specialise in helping Scottish residents to escape debt, and can offer you the help and guidance you need during these times. Contact a member of the team today and take your first step towards a debt-free future.