When the Bounce Back Loan Scheme was introduced during the pandemic, it provided vital support to small businesses across the UK. For many owners and directors, it meant the difference between staying afloat and shutting down completely.
Now, as repayments continue and trading conditions remain difficult, a growing number of business owners are facing the reality of being unable to repay what they borrowed. If this sounds familiar, you are not alone. And you do have options.
What Was the Bounce Back Loan Scheme?
The Bounce Back Loan Scheme (BBLS) allowed small businesses to borrow up to 25 percent of their turnover, with loans capped at £50,000. The government covered the first year of interest and guaranteed the loan to the lender. Repayments began after 12 months, with the remaining balance to be paid over six years at a fixed interest rate of 2.5 percent.
It was intended to be quick and simple, and for many it was. But now, several years later, businesses that took out the loan are struggling to meet the repayments, especially with rising costs and lower income.
What If I Miss a Payment?
If you miss a Bounce Back Loan repayment, your lender will normally get in touch to discuss the situation. They may remind you of your options under the Pay As You Grow scheme. This support was introduced to help businesses who are finding it difficult to keep up with payments. It includes:
- Extending the repayment period to ten years
- Taking a six-month payment holiday
- Making interest-only payments for six months
These measures are designed to ease pressure in the short term. However, if your financial situation does not improve, and payments continue to be missed, the lender may take steps to recover the debt.
Although the loan was guaranteed by the government, lenders are still responsible for collection. They must follow proper processes and act fairly, but they are also permitted to take recovery action where necessary.
Will I Be Personally Liable?
If your business is a limited company, the Bounce Back Loan is a business debt. There was no personal guarantee required for this scheme, which means in most cases, directors are not personally liable.
That said, there are exceptions. If the loan was misused — for example, taken out when the business was not eligible, or used for personal expenses — you could be held personally responsible. This is particularly important if your company becomes insolvent. An insolvency practitioner will review how the loan was used and report any misconduct.
In cases where the loan was used properly and the company simply could not recover financially, directors are unlikely to face personal consequences. But it is always best to get professional advice early.
What Happens If the Business Fails?
If your business can no longer trade and is facing insolvency, the Bounce Back Loan becomes one of its debts. You may need to consider closing the company through a formal insolvency process, such as creditors’ voluntary liquidation.
In this process, a licensed insolvency practitioner will assess the company’s assets and liabilities, deal with any remaining creditors and ensure legal obligations are met. The Bounce Back Loan will be treated like any other unsecured business debt.
As long as there has been no misconduct or misuse of funds, you should not be held personally liable. But the earlier you get advice, the more options you will have.
What Should I Do Now?
If you are worried about Bounce Back Loan repayments or are already falling behind, you are not alone. Many directors are in the same position, and it is nothing to be ashamed of. The important thing is to take action now, rather than wait for the situation to worsen.
At Adcroft Hilton, we speak to people in your position every day. We understand how stressful financial pressure can be, especially when you are trying to keep a business going. Get in touch for straightforward advice and clear options, with no judgement.
You are not the first person to face this issue and you will not be the last. But you do not have to face it on your own.
