Bounce Back Loan arrears

A Bounce Back Loan was a government-guaranteed loan of up to £50,000 taken out by many small companies during the pandemic, repayable over up to ten years. The loans are not personally guaranteed by directors, so if the company genuinely cannot pay and is wound up, the lender claims on the government guarantee and the director is not normally chased personally. The important exception is misuse: if the money was taken when the company was not eligible, or used for personal benefit rather than the business, directors can be held personally liable and can be disqualified, and the Insolvency Service actively pursues this, including for companies that were later dissolved. If your company has an unaffordable Bounce Back Loan alongside other debts, the loan is dealt with as part of a formal insolvency like any other unsecured debt, provided it was used properly. Honesty about how the money was used is essential, so take advice before closing the company. British Business Bank; Insolvency Service

Key facts

What it was: A government-guaranteed loan up to £50,000, up to 10-year term
Personally guaranteed?: No, not if the loan was taken and used properly
The exception: Misuse or ineligibility can mean personal liability and disqualification
In insolvency: Treated as an unsecured debt if used correctly

Proper use protects you

If the loan was eligible and spent on the business, it is just another unsecured debt in a liquidation. If it was misused, the risk shifts to you personally, and a strike off will not hide it, because dissolved companies can be investigated. Be straight with your practitioner about how the money was used.

Common questions

Do I have to repay a Bounce Back Loan personally?

Not if the loan was taken and used properly, because there is no personal guarantee. The lender claims on the government guarantee. Misuse or ineligibility is different and can create personal liability.

Can I strike off a company with a Bounce Back Loan?

It is risky. The lender or Insolvency Service can object or investigate, and directors of dissolved companies can be pursued for loan misuse. A liquidation is usually the proper route. Take advice first.

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Bounce Back Loan arrears. A Bounce Back Loan was a government-guaranteed loan of up to £50,000 taken out by many small companies during the pandemic, repayable over up to ten years. The loans are not personally guaranteed by directors, so if the company genuinely cannot pay and is wound up, the lender claims on the government guarantee and the director is not normally chased personally. The important exception is misuse: if the money was taken when the company was not eligible, or used for personal benefit rather than the business, directors can be held personally liable and can be disqualified, and the Insolvency Service actively pursues this, including for companies that were later dissolved. If your company has an unaffordable Bounce Back Loan alongside other debts, the loan is dealt with as part of a formal insolvency like any other unsecured debt, provided it was used properly. Honesty about how the money was used is essential, so take advice before closing the company.

Speak to a Licensed Insolvency Practitioner

Tell us briefly what is happening and we will arrange a free, confidential, no obligation call with a Licensed Insolvency Practitioner. The earlier you get advice, the more options you usually have.

Free, confidential and no obligation. We are an independent information service and introduce directors to a Licensed Insolvency Practitioner. This is general information, not regulated advice.