Do I have to pay my Bounce Back Loan if my business goes bust?

Q: I applied for a Bounce Back Loan when times got tough. Do I still have to repay it if my business closes?

I own a hospitality business and during the Covid 19 pandemic, we lost several large clients which left us struggling to stay afloat. I applied for a Bounce Back Loan, which offered no repayment and no interest for 12 months, with a low APR following that term.

While the business survived for another year or so, we weren’t able to fully recover and we’re facing closure in the next few weeks. Will I still be liable to pay back the Bounce Back Loan?

I’m very sorry to hear your news, it must be a very worrying time for you.

According to the Gov.uk website, more than £46 billion was issued in Bounce Back Loans as they provided a lifeline to businesses that needed them in the face of the Coronavirus pandemic.

Repayment promise to lenders

A key feature of the Bounce Lack Loan was the Government’s guarantee to repay outstanding loan amounts to lenders if their borrower went bust. However, sadly, this only applies to lenders and borrowing businesses continue to be fully liable for repayment.

While your company is still trading, your Bounce Back Loan can’t be written off.

You’ll need to apply for help

If your company is unable to repay the Bounce Back Loan, you’ll need to apply for help with an Insolvency Practitioner as soon as possible. This could avoid misconduct accusations later on which may lead to sanctions.

Liquidators specialise in helping you to close down your business in an orderly manner and will be able to advise you on what happens to your outstanding Bounce Back Loan.

You might also need to surrender to any investigations required by the Insolvency Service. This is painful, but necessary. It may seem extreme, but investigations may be likely as the Government seeks to crack down on fraud – with around £1.1 bn in Bounce Back Loans flagged as fraudulent (source as before).

We can help

Get in touch with the specialist team at Downs Solicitors today and we can quickly work with you to discuss your options.


Bryony Palmer

Bryony Palmer

Senior Associate

Tel: +44 (0)1306 502276

Office: Dorking Office

Email: [email protected]