Company with a Bounce Back Loan? Understand Your Options
Can I stop paying my bounce-back loan?
If your company has a Bounce Back Loan and you are struggling to meet repayments, it’s important to understand your options clearly.
We help directors who no longer wish to continue trading to exit their company in a structured and compliant way.
What Happens If a Company Cannot Repay a Bounce Back Loan?
Bounce Back Loans are a liability of the company.
If a company is unable to repay its debts, including a Bounce Back Loan, there are formal processes that may apply, depending on the company’s financial position.
If your company has a Bounce Back Loan and you’re under pressure, you’re not alone — but it’s important to act early and understand your options.
If you’d like a clear, confidential assessment of your situation, you can contact us here
How We Can Help
If you no longer wish to continue running your company, we can assist with:
- Transferring ownership of the company
- Handling the administrative process
- Managing next steps depending on the situation
Our service is designed to provide a clear and structured exit, without unnecessary delay.
We provide clear, straightforward guidance — no jargon, no pressure
A Bounce-back loan given to a limited firm was provided on an unsecured basis and is no different to any other unsecured loan but remember the bank that issued it was guaranteed against default by the government.
If your business is unable to trade then it can be wound up either by a creditors winding up petition or by a voluntary winding up order. If your business has no way of paying creditors the debt is written off and the government will pay the bank for any losses they may incur.
What happens if I stop paying my bounce-back loan and my company is put into receivership
If the company has no assets to pay off the loan then the debt will be written off
Providing that you, as a director, have not broken the terms and conditions of the bounce-back loan scheme, then it will be treated no differently than any other unsecured debt.
However, the use of the loan as to how it was spent will be investigated and dealt with by the appointed receiver during the liquidation process. If the loan was used entirely for the running of the business and you can prove that all should be okay.
All licensed insolvency practitioners have a legal duty to look into how a bounce-back loan was used by a business. It could have been used to pay directors’ wages providing the level of remuneration was a reasonable expense to keep the company afloat.
Misconduct of the bounce-back loan scheme
The main misconduct with bounce-back loans is personal use of the funds and fraudulent applications (such as transferring bounce-back loan funds to a separate company, inflated turnover, or applying when the firm was already insolvent).
Concerns will be raised if some of the money was used personally, i.e. drawn out of the business account and put into a personal account.
Bounce Back loans introduced during the COVID pandemic had very limited eligibility criteria; many businesses qualified for loans of up to £50,000 on an unsecured basis. The government covers the banks that loaned the money for losses if the company defaults on the loan.
If you’re unsure what to do next, request a confidential consultation today