2023 has seen Northern Ireland’s business sector face several challenges, from persistent inflation to decreased consumer spending. Adding to this, some businesses are grappling with government-backed Bounce Back Loan repayments – with a maximum loan amount of £50,000 – leaving them still feeling the aftershock of the pandemic.
For businesses owners across Northern Ireland, particularly in the hard-hit hospitality sector, it’s a difficult time explains Sinead Campbell, Head of Money, Debt, and Quality at Advice NI.
Sinead says “The current economic climate means business owners are experiencing financial strain. Additionally, many took out loans to survive the pandemic, and as a result are struggling with repayments and high interest rates. We’re urging struggling businesses to get in touch and take the first step in finding a solution.”
In this column, Sinead provides practical advice and guidance to help businesses stay afloat. From understanding Bounce Back loan repayments to exploring available funding opportunities, how to speak to lenders and solutions for dealing with debt.
Understanding Bounce Back Loans and What to Do If You’re Struggling to Pay
Sinead continues, “When the Bounce Back Loan scheme was introduced, it was a lifeline for businesses who were able to borrow between £2,000 and £50,000, with the cash arriving within days. This scheme gave lenders a 100 per cent guarantee – with borrower always remaining fully liable for the debt – making them a low-risk option for businesses in need.
“If you’re struggling with Bounce Back Loan repayments, the best thing to do is address the issue head-on. Ignoring debt won’t make it go away and could lead to severe consequences such as business insolvency”
“At Advice NI we can help you initiate conversation with your creditors or lenders. We understand that it can be intimidating, but lenders want to recover their money after all and they’re more likely to cooperate if they see a sincere effort to repay.”
Facing Debt Collection: Know Your Rights
If your Bounce Back Loan debt goes to collections, it can be a daunting experience. However, it’s crucial to remain calm and seek advice if needed, explains Sinead.
“It’s important to understand that the consequences of not paying some debts can be more serious than others, ranging from late payment fees to facing court action, disconnection by a utility provider or closure.
“Communication is key and like talking to your creditors, we recommend reaching out to the debt the collection agency to discuss settling the debt, establishing a repayment plan, and providing detail on your current situation. Alternatively, you can get in touch with Advice NI who can do this on your behalf and help with business debt support.
Pay as You Grow: Flexible Repayment Options
The Pay as You Grow initiative for Bounce Back Loan borrowers, is aimed at helping businesses get back to regular trading and gives businesses three options says Sinead.
“The first is Pay as You Grow, which extends the loan period from six to ten years at the same fixed interest rate of 2.5 per cent, longer payment terms will however mean more interest. Secondly, businesses can request a repayment holiday for up to six months – this is only available once during the term of the Bounce Back Loan.
“Lastly, businesses can request to move to interest only payments up to three times during the term of their loan with each interest only period lasting 6 months. Before opting for any of these options it is important you carefully assess your ability to pay over a longer timeframe and consider factors like your business’s future prospects and how the increased interest will impact your finances.”
Explore Finance Schemes and Support
Support is available for businesses including financial assistance and specific initiatives to help with starting up, managing, or growing a business. If you’re unsure about the support you’re eligible for, Sinead says NI Business Info is a great place to start
She explains, “NI Business Info’s support finder can help you locate local publicly funded and not-for-profit sources of assistance. These cover various aspects of funding, such as small business rates relief, mentoring programs, government-backed incentives, and information on grants from Invest NI.”
Get in Touch With Advice NI
In the last twelve months Advice NI’s specialist Business Debt Advisers have managed over £7.8 of business debt in 155 business cases.
Sinead concludes, “The most important thing to remember is that you don’t have to face debt alone. Advice NI offers free and confidential advice to help you navigate challenging situations and seeking support can make a significant difference in resolving debt-related issues and protecting your business’s financial future.”
Advice NI and the Independent Advice Network is made up of 64 members and more than 300 advisers across Northern Ireland, all providing free, impartial, and confidential advice. Struggling businesses can call 0800 915 4604 or email [email protected] where they can speak directly with an adviser between 9am and 5pm, Monday to Friday. Advice NI’s webchat is also open 9am-1pm Monday to Friday
