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 or ineligibility, which can make directors personally liable. British Business Bank; Insolvency Service
- 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
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Proper use protects you
If the loan was eligible and spent on the business, it is just another unsecured debt in a liquidation: if your company has an unaffordable Bounce Back Loan alongside other debts, it is dealt with as part of a formal insolvency like any other unsecured debt. 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. The Insolvency Service actively pursues this, including for companies that were later dissolved, so a strike off won't hide it. Be straight with your practitioner about how the money was used, and take advice before closing the company.
If the company is still paying, or you are weighing up Pay As You Grow, refinancing or a CVA, our step-by-step Bounce Back Loan options guide sets out each route and what it means for you.
Related data
Our Bounce Back Loan repayment guide: What happens when a Bounce Back Loan cannot be repaid, and the director risk. Every page on our data hub names its official source.
Where to go from here
- Use the matching template: Letter to a lender about financial difficulty.
- If you decide to speak to a Licensed Insolvency Practitioner, choose your own: our practitioner directory lists every practitioner on the official Insolvency Service register, and how to choose an insolvency practitioner explains what to ask. Always confirm their entry on the official register before you instruct anyone.
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.