Business/Commercial Loans
Borrowing money is often a natural part of business; however depending on your company and loan type you may be personally liable for repayments.
Business/Commercial Loans
When it comes to running a business, borrowing money is often an inevitable part of the process. Money may be needed to kick start a brand new company or additional funds injected to maintain a healthy cash flow to assist in the day to day operations of an already established business. The structure of your business will affect the way you obtain lending, and the extent to which you yourself could be personally liable for paying the money back. You may operate as a sole trader or you may have incorporated as a limited company; both have different implications when it comes to repaying funds borrowed.
Sole traders
As a sole trader, you are personally responsible for repaying any debt that you take on, even if the money borrowed is used for business purposes. This is because your business is not seen as an entity separate from yourself. Should you be unable to keep up with the repayments on any borrowing, debt collection companies can and will look to you to pay back the money owed.
Limited company directors
One of the benefits of operating under a limited liable company structure is that the company is liable for any debts rather than the company director themselves. This means that if the company encounters financial difficulties which impacts on the ability to repay its debts, the lender cannot ask the director to pay this money back from their own funds. If your limited company is unable to repay their debts, and the company is subsequently liquidated, the debts are written off.
However, depending on the history and status of your business, you may be asked to provide what is known as a personal guarantee (PG) on any borrowing you take out for the purposes of your limited company. If you sign a personal guarantee then you, as an individual, take responsibility for paying back the loan should your company be unable to do so. This means that even if your company is liquidated, any debt that you have personally guaranteed will still have to be paid from your own funds. Personal guarantees are typically requested when a lender sees the loan as risky. This could be because the company is newly established, the loan is particularly large, or because the borrowing business has a history of late or non-payment of debts.
What next?
Should you be in the position where you are being hounded for outstanding business debts, you must seek expert advice as soon as possible. Left alone, your debt problems will only get worse and the options open to you will decrease. Call our experienced professionals today.
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After losing my job, I started relying on credit cards and payday loans to get me through the month. As the debt build up, I found it increasingly difficult to keep up with the monthly payments and was hit with late penalties and added interest which only made the problem worse.
I was ignoring letters and phone calls, and dreading knocks on the door fearing it was bailiffs. This was when I knew I had to seek expert advice. After contacting Northern Ireland Debt Solutions, I felt an immediate sense of relief. Within a matter of days, the phone calls and threatening letters stopped, and I was finally able to move on with my life.
After burying my head in the sand for many years, I knew I had to face up to my debt problems. I was ashamed of the situation I had got myself in to, and it took a lot of courage to pick up the phone and make that first call to Northern Ireland Debt Solutions.
My adviser was sympathetic to my problems and I never felt as though I was being judged. He explained all of the options which were available to me and explained how each would work in my situation. While bankruptcy is a big step, I knew it was the best thing for my circumstances. I paid off what I could afford and the rest was written off. Three years on, I am in a much better place financially and able to look forward to the future.
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