What to do if you cannot repay your Bounce Back Loan? Facing difficulties repaying this government-backed loan can feel overwhelming, especially with the pressure of potential consequences. 

However, if you’re also in this row, don’t panic! There are solutions available for you!

Several options can help manage your debt and provide breathing room. These include Time to Pay (TTP) arrangements with HMRC to ease tax burdens and Company Voluntary Arrangements (CVAs) to involve all creditors and potentially restructure your debt.

In this guide, we’ll explore practical strategies to tackle Bounce Back Loan repayment issues effectively. From communicating with lenders to exploring alternative repayment arrangements, we’ll provide actionable advice to help you navigate financial difficulties with confidence.

Exploring The Ultimate Consequences If You Can’t Pay Your Bounce Bank Loan?

While the government guarantees Bounce Back Loans (BBLs), failing to repay them can have severe drawbacks for your business. Here’s a detailed breakdown of what you need to understand:

1. Debt Collection Steps:

  • Initial Contact: If you miss payments, the lender will first reach out to discuss the situation and explore potential solutions.
  • Formal Demand for Repayment: If discussions prove unproductive, you may receive a formal demand letter outlining the outstanding amount and requesting immediate action.
  • Legal Action: This could involve court proceedings to recover the debt, resulting in significant legal fees and potentially damaging judgments, impacting your business’s ability to operate and secure future credit.

2. Impact on Credit Rating:

Even with the government guarantee, missed BBL payments will negatively impact your business credit score. This score is crucial for accessing future financing, loans, and lines of credit. A poor credit score can restrict your future growth and operating potential.

3. Insolvency and Personal Consequences (for Businesses)

If your business is unable to repay the loan, it could eventually trigger insolvency proceedings, leading to the compulsory closure of the company. Furthermore, in cases of wrongful trading or misconduct during loan use, the directors might face personal financial consequences.

What To Do If You Cannot Repay Your Bounce Back Loan? 

If you find it hard to repay a Bounce Back Loan, you’re not alone. Many people face this challenge. However, there are options available to help you manage the situation.

1. Reach out to your lender

It’s crucial to act quickly and communicate openly with your lender. Explain your situation and explore potential solutions together. Your lender might be able to adjust your repayment schedule to make it more manageable for your business’s current cash flow. 

This could involve:

  • Lowering monthly payments: Spreading the loan over a longer period.
  • Temporarily pausing repayments: Taking a short break from repayments to give your business breathing room.

2. Consider loan restructuring: 

In some cases, your lender might be able to restructure the loan terms to better suit your situation. Like, they may give you more time to repay the full amount or convert your loan to a fixed-rate loan making the repayments more manageable for you.

3. Consider a debt consolidation loan:

If you’re struggling with multiple debts, you might want to consider a debt consolidation loan. This involves taking out a new loan to pay off your existing debts and combining them into one monthly payment. It can make it easier to keep track of your finances and reduce your overall monthly outgoings.

4. Company voluntary arrangement

You might want to check if you qualify for a Company Voluntary Arrangement (CVA). Licensed insolvency practitioners (IP) can negotiate with your lenders/creditors for a formal restructuring of your company debts under a CVA.

5. Administration

If needed, you could select a licensed insolvency practitioner to act as an administrator. If eligible, company administration can shield you from legal actions initiated by your creditors while you, along with the IP, devise a suitable plan to revitalise your business.

6. Seek professional advice:

If you’re unsure how to proceed, consider consulting with a financial advisor or business specialist. They can offer guidance and help you explore different options based on your specific circumstances.

Do I Need To Write Off My Company If I Cannot Pay My Bounce Back Loan Right Now? 



No, you typically don’t need to write off your company immediately if you can’t repay your BBL. Lenders must first pursue debt recovery. Only if your business becomes insolvent will the loan potentially be written off.

Here’s the breakdown:

  • Government Guarantee: Although the government guarantees the loan for lenders, they aren’t immediately writing it off. Lenders are legally obligated to attempt debt recovery before taking stronger measures.
  • Formal Insolvency: If your company reaches formal insolvency, meaning it can’t pay debts, and enters an administration process, the loan might be considered for writing off. In this process, an administrator evaluates the company’s situation and may opt to write off the debt as part of the closure.


Is It Possible To Liquidate My Company Without Repaying My Bounce Bank Loan? 

Liquidating your company without repaying a Bounce Back Loan is possible, but not ideal. It depends on your company’s financial situation and involves significant consequences.

You can consider liquidation only if your company reaches a point of formal insolvency (cannot pay debts). This involves a Creditors’ Voluntary Liquidation (CVL), a process overseen by a licensed practitioner who sells your company’s assets and distributes the proceeds to creditors.

Importantly, even with liquidation, the Bounce Back Loan might not be fully written off. The remaining debt depends on the money recovered from selling your assets. Any outstanding amount after this point is typically written off as the loan wasn’t personally guaranteed.

So, before resorting to liquidation, explore other options like payment adjustments, loan restructuring, or even a Company Voluntary Arrangement (CVA) with professional guidance. These can potentially help your company recover and avoid the consequences of liquidation

How To Restructure My Limited Company With A Bounce Bank Loan? 

While a company struggling to repay its Bounce Back Loan might feel trapped, several solutions can help it get back on track. Two potential strategies to consider are:

1. Time to Pay (TTP) Arrangement with HMRC:

This allows extended repayment for other tax debts like VAT and Income Tax, freeing up cash flow for the Bounce Back Loan. However, this requires demonstrating financial viability and a solid repayment plan.

2. Company Voluntary Arrangement (CVA):

If your financial situation is broader, a CVA offers a more comprehensive solution. This legally binding agreement involves all creditors, including the Bounce Back Loan provider, and establishes a longer repayment period (up to 5 years). 

CVAs offer more flexibility by potentially reducing your debt, extending repayment terms, or even partially forgiving it. However, pursuing a CVA requires being insolvent or close to it, and a convincing plan demonstrating how the CVA benefits all creditors is essential.

Pay as You Grow Scheme For BBLS Repayments: How Can It Help You? 

The government’s “Pay as You Grow” scheme is another best option to choose that offers several options to ease the burden and help your business recover. 

Here’s how:

  • Reduced monthly payments: Your lender might agree to temporarily reduce your monthly payments, giving your business more breathing room and allowing you to focus on other financial priorities.
  • Extension of the loan term: Extending the loan term spreads your repayments over a longer period, making them smaller and more manageable, improving your cash flow.

  • Payment holiday: In exceptional circumstances, you might be able to negotiate a short-term break from repayments. This allows you to focus on recovering income before resuming repayment.

Preventive Practices To Ignore  Bounce Back Loan Repayment Issues

Here are some top tips for handling Bounce Back Loan repayment issues:

1. Communication is Key: If you’re facing difficulties in repaying your Bounce Back Loan, communicate with your lender as soon as possible. They may be able to offer solutions or alternative repayment arrangements.

2. Explore Repayment Options: Investigate options such as repayment holidays or extending the loan term. These arrangements can provide breathing space and ease financial pressure.

3. Consider Loan Restructuring: Discuss restructuring the loan with your lender. This could involve adjusting the repayment schedule or exploring other terms that better suit your financial situation.

4. Budget Wisely: Review your finances and create a realistic budget. Cut unnecessary expenses and allocate funds towards loan repayment.

5. Explore Government Support Schemes: Investigate government support schemes or initiatives like Pay As You Grow, designed to assist businesses and individuals facing financial challenges.

What is deemed misuse of a Bounce Back Loan?

The Bounce Back Loan had broad usage criteria – for cash flow, business investment, or working capital, but it must benefit the business economically, not for personal use.

The Treasury stated a Bounce Back Loan could be used as a dividend for a cash-poor business with retained profits. However, rules on unlawful dividends and insolvent companies still apply. Taking dividends from an insolvent company might require repayment if it enters formal insolvency. 

If excessive dividends contributed to insolvency, directors could be liable for repayment.

Did you misuse Your Bounce Bank Loan? We Are Here To Help You! 

If you facing repayment difficulties due to misusing your Bounce Back Loan, Vanguard Insolvency understands the complexities of navigating your financial challenges!

At Vanguard Insolvency, we’ll help you explore these options and determine the best path forward for your specific situation, helping your company recover and build a brighter future. 

Senior Partner at Vanguard Insolvency Practitioners | Website | + posts

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.