I cannot pay my Bounce Back Loan – What options do I have?
Approximately 1.5 million UK businesses borrowed more than £47 billion through the Bounce Back Loan Scheme between May 2020 and March 2021. For companies that borrowed at the start of the scheme, the original six-year repayment terms are now reaching their end in 2026. For those that borrowed later or extended via Pay As You Grow, final repayments fall due between 2027 and 2031.
The scale of the challenge is significant. Latest Insolvency Service data shows that over 113,000 companies with Bounce Back Loans had either entered formal insolvency or been dissolved. The voluntary repayment scheme also closed in December 2025, meaning that the remaining flexibility options for directors are now more limited than at any point since the scheme launched. Bounce Back Loan concerns remain one of the most common reasons directors contact us, particularly as the original repayment terms reach their end.
“Bounce Back Loan enquiries have shifted significantly over the past two years. In 2023 and 2024, directors were mostly asking about PAYG options and how to restructure repayments. Now, in 2026, the conversations are much more urgent and many have exhausted their flexibility and are facing a binary choice between finding the money or accepting that the company needs to close. We’re guiding more directors through that decision than ever before.”
- Julie Palmer, Partner, BTG Begbies Traynor
Am I personally liable for the debt if I cannot pay my Bounce Back Loan?
The single biggest question directors ask us about their BBL is whether they’re personally liable. In the vast majority of cases, the answer is no provided the funds were used for a legitimate business purpose. Bounce Back Loans came with a raft of appealing benefits; one of these was that the government provided 100% security to the lending banks. This meant that no personal guarantee had to be given by the company directors or shareholders.
While this may not mean much while the loan is being repaid as planned, should the borrowing company become insolvent, this government security becomes extremely valuable.
As the loan is backed by the government rather than by a director personal guarantee, should the company find itself in financial difficulties and subsequently enter an insolvent liquidation process, the responsibility for repaying the Bounce Back Loan will fall to the government rather than the company director.
In the event that your company cannot afford to repay the Bounce Back Loan, you will only be held personally responsible for repaying the money if it can be proven that you have misused the Bounce Back Loan funds.
What counts as Bounce Back Loan fraud?
Bounce Back Loans were not designed for any one purpose; instead, they were offered to companies to use in any way that would provide “an economic benefit” to the business. This could include, strengthening its cash flow position, purchasing new machinery, replenishing stock, or paying staff wages.
As long as the money was spent in a way which was directly related to the business and its operations, it is unlikely you will be accused of misusing the funds. However, if you used the money to fund personal purchases, you could find yourself personally liable for the outstanding amount if your company is not in a position to keep up with the agreed monthly repayments.
Of the directors we’ve advised about potentially fraudulent Bounce Back Loan concerns, only a small minority have genuine misuse issues. Most used the money exactly as intended but are now struggling because the business hasn’t recovered as they expected.
If you are in any doubt as to whether you may have spent Bounce Back Loan funds in a potentially fraudulent manner, you should seek the advice of a licensed insolvency practitioner as a matter of urgency. They will be able to assess the position you find yourself in, and advise whether personal liability for the Bounce Back Loan is something you need to be concerned about.
What happens if I have dissolved a company with a Bounce Back Loan?
If your company was dissolved (struck off at Companies House) rather than formally liquidated, and it had an outstanding Bounce Back Loan, you may still be at risk of investigation. The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 gave the Insolvency Service the power to investigate the conduct of directors of dissolved companies and, where appropriate, begin director disqualification investigations.
This means that dissolving a company to avoid repaying a Bounce Back Loan is not a safe route. If the Insolvency Service identifies potential misconduct, including misuse of Bounce Back Loan funds or failure to use the money for the economic benefit of the business, the consequences can include disqualification from acting as a director for up to 15 years.
“We regularly speak to directors who dissolved their company thinking the Bounce Back Loan would simply disappear. The 2021 Act changed that completely. If you’re in this position, it’s important to understand your potential personal exposure before the Insolvency Service contacts you.”
- Julie Palmer, Partner, BTG Begbies Traynor
What we typically see
A director of a small events company contacted us in early 2026 after realising they could no longer afford their monthly Bounce Back Loan repayments alongside their other creditors.
They had borrowed £50,000 in 2020 and extended the term to ten years via PAYG, but the business had never fully recovered from the pandemic and was now also struggling with rising costs. After reviewing the company’s finances, we confirmed that the business was no longer viable. The director was understandably worried about personal liability, but because the Bounce Back Loan had been used entirely for business purposes such as wages, rent, and stock during the lockdown period, there was no personal exposure.
We guided them through a Creditors' Voluntary Liquidation. The Bounce Back Loan was dealt with as an unsecured company debt, the government guarantee covered the lender’s loss, and the director was free to move on without personal liability. They told us the biggest relief was simply knowing where they stood.
I cannot pay my Bounce Back Loan but I think my company has a future
Just because you are currently unable to pay your Bounce Back Loan monthly repayments, does not mean that the company is beyond rescue. Many of the directors we speak to assume that if they can’t pay the Bounce Back Loan then the company has to close. That’s not always the case. If the underlying business is viable, options like a Company Voluntary Arrangement (CVA) can include the Bounce Back Loan within a broader repayment plan.
There are a number of business rescue and recovery strategies that could help strengthen the cash position of your company, freeing up vital funds you can direct towards paying back your Bounce Back Loan.
A Company Voluntary Arrangement (CVA) allows you to consolidate your liabilities into one legally-binding payment plan which will see all included debts cleared within a determined period which is typically 3-5 years. Alternatively, if your company is experiencing threats of legal action, placing the company into administration could provide the time and breathing space needed while a way forward is planned.
Both administration and CVAs can only be entered into under the guidance of a licensed insolvency practitioner. If you are experiencing problems paying back your Bounce Back Loan, or are struggling with other unmanageable debts, an insolvency practitioner should be your first port of call.
I will not be able to pay my Bounce Back Loan – Can I close the business?
The simple answer is yes, you can close a business with an outstanding Bounce Back Loan. When it comes to liquidation, a Bounce Back Loan is not treated any differently than any other unsecured loan your business may have. this means that if the company becomes insolvent and needs to be wound up, the remaining balance of the Bounce Back Loan will be included in the process.
The voluntary liquidation of an insolvent company by way of a Creditors’ Voluntary Liquidation – or CVL - is handled by a licensed insolvency practitioner. They have a number of duties during the process, and one of these is to identify company assets before distributing the proceeds of these to outstanding creditors.
Any remaining debt, including Bounce Back Loan debt, will be written off (unless it has been secured with a director’s personal guarantee), and the insolvent company’s directors/shareholders will not be asked or expected to repay any shortfall.
How BTG Begbies Traynor can help with your Bounce Back Loan
If you’re worried about your Bounce Back Loan, you’re not alone — we speak to directors in your position every day. Whether you’re concerned about personal liability, unsure whether your company is still viable, or simply need someone to explain your options clearly, we can help.
Call your nearest BTG Begbies Traynor office to arrange a free, confidential consultation. We’ll assess your position and give you an honest picture of where you stand.
