Bounce-Back Loan Issues

A Quick Recap: What Is a Bounce Back Loan?

The Bounce Back Loan Scheme (BBLS) let eligible businesses borrow between £2,000 and £50,000, capped at 25% of turnover, with the government guaranteeing 100% of the loan to the lender. Crucially, that guarantee protects the lender, not the director. No personal guarantee was required to take one out.

Loans came with a 6-year term, a fixed 2.5% interest rate, and the government covered interest payments for the first 12 months. That structure made borrowing simple. It didn’t make repaying it simple, especially for businesses that were still recovering when repayments started.

Common Bounce Back Loans Problems

Bounce back loans problems tend to fall into a few recurring patterns:

• Repayments starting just as trading conditions worsened, rather than improved
• Rising costs elsewhere in the business squeezing cash flow available for loan repayments
• Directors unaware of the Pay as You Grow options available to them
• Loans taken out for one purpose, then absorbed into general cash flow during a difficult period
• Uncertainty about what happens if the loan simply can’t be repaid at all

None of these mean a director has done anything wrong. But how they’re handled from here matters a great deal. 

Bounce Back Loan Repayment: What Are Your Options?

If bounce back loan repayment has become a struggle, there are formal options built into the scheme before things escalate. These are known as Pay as You Grow (PAYG) measures, and lenders are required to offer them:

1. Extend the loan term: Borrowers can extend from 6 years to 10 years, reducing monthly repayments significantly.
2. Move to interest-only payments: Up to three separate 6-month interest-only periods are available across the loan term.
3. Request a repayment holiday: A single payment holiday of up to 6 months is available, though eligibility depends on the loan already being active for a period first.

Can I Extend My Bounce Back Loan?

This is one of the questions we’re asked most often, and the answer is generally yes. Most borrowers can request to extend their bounce back loan from 6 to 10 years directly through their lender, without needing to provide extensive justification. 

It’s usually the simplest first step if repayments are becoming difficult, though it should be considered alongside your wider financial position, not in isolation.

When a Bounce Back Loan Becomes a Bigger Problem

Where things get more serious is when a company genuinely can’t repay the loan at all, and directors aren’t sure what happens next. A few points matter here:

• If the company can’t repay, the lender is entitled to recover from the company itself, not the director personally, since no personal guarantee was required.
• However, directors can still face personal consequences if the loan was obtained improperly, used for purposes outside the scheme’s rules, or if the company was dissolved specifically to avoid repaying it.
• The Insolvency Service has specific powers to investigate directors of dissolved companies with outstanding bounce back loan debt, even after the company has been struck off.
• Director disqualification, and in some cases personal compensation orders, can follow if misuse is identified – this applies even years after a company has closed.

This is exactly why simply dissolving a company to walk away from an unmanageable bounce back loan is not the shortcut it might seem. It’s the same trap we see directors fall into with unpaid debts more generally, and it can create a far bigger personal problem than the original loan ever was.

Getting Help With a Bounce Back Loan Before It Escalates

If your company is behind on repayments, or you can see that becoming likely, the worst approach is to do nothing and hope the lender doesn’t notice. Genuine help with a bounce back loan means looking at the full picture, not just the loan in isolation.

We typically help directors by:

• Reviewing whether PAYG options such as term extension or a repayment holiday are the right fix
• Assessing whether the loan sits alongside other company debts that need addressing together
• Advising honestly on whether the company is still viable, or whether formal insolvency is the more responsible route
• Making sure any decisions made now don’t create personal risk for you further down the line

Every case is different. A company with a temporary cash flow problem needs very different advice from one where the bounce back loan is just one symptom of a much wider financial difficulty.

Why Directors Come to BCIA for Bounce Back Loan Support

We understand that most directors who took out a bounce back loan did exactly what they were encouraged to do at the time. Struggling to repay it now isn’t a failure, but how it’s handled from here matters, both for the business and for you personally.

Our senior advisors, working from our Matlock and Manchester offices, bring 50 years of combined experience to helping directors work through bounce back loan issues properly. We’ll give you a clear, honest view of your options, whether that’s restructuring repayments, addressing wider company debt or planning a formal closure the right way.

If your bounce back loan has become difficult to manage, don’t wait for the lender to take the next step. Get in touch with BCIA Recovery & Turnaround for free, confidential director support and find out where you actually stand.