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Struggling to repay Bounce Back Loan or Coronavirus Business Interruption Loan?

Here, Ben Cowgill of Cowgills’ Business Recovery looks at your options if your company can’t repay the Bounce Back Loan or Coronavirus Business Interruption Loan and how we can help you.


Recap of the Bounce Back Loan Scheme (BBLS)?

The BBLS was launched to assist UK businesses to survive the pandemic by enabling them to obtain a six-year term loan (later extended to 10 years) at a government set interest rate of 2.5% per annum. Businesses could borrow up to £50,000 – capped at 25% of total turnover with repayments deferred for 12 months and the first 12 months of interest paid by the government.

Repayment towards a bounce back loan takes the form of a series of equal monthly instalments directly to the lender.


Recap of the Business Interruption Loan Scheme (CBILS)?

The Coronavirus Business Interruption Loan Scheme (CBILS) was designed to provide financial support to smaller businesses across the UK that were losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak.


When did CBILS and BBLS start and end?

CBILS opened for applications in March 2020 and BBLS in May 2020. Both schemes closed for applications on 31 March 2021. For many businesses this means that they are already or will very soon need to start making repayments.


My business can’t afford to repay – am I personally liable?

When these loans were originally offered, no one expected that lockdown measures would still be in place more than a year later. So, many businesses who took out a loan with confidence in their ability to repay it when the time came, have found that trade simply has not returned to pre-pandemic levels. This has caused huge problems when it comes to repaying this borrowing.

If you have explored all the options provided by the Pay As You Grow scheme,  and still don’t believe your company is in a position to repay its BBL, you may understandably be worried about how this will affect you personally.

Banks were given security for lending through the schemes and so directors were not required to provide a personal guarantee. So, if your company is unable to repay the loan, the government will step in and ensure the bank receives payment for the money lent.

Unless you have misused the BBL funds, you will not be held personally liable for repaying the money owed.


However, liability remains with the borrowing businesses unless the company enters liquidation.

What should we do if we know that we can’t repay the loans?

Just because your company is currently unable to repay, does not mean that all hope is lost. There are a multitude of ways of turning around a business in financial distress which may involve creditor negotiations, refinancing, or a complete restructure of its operations.

The government security on the loan will only take effect should your company enter a formal liquidation process so if you want your business to continue post pandemic then the loans and their repayments must be dealt with.

Don’t bury your head in the sand. If you are worried about your business’s finances, it doesn’t have to mean the end – but you should seek professional advice as soon as possible – early intervention is vital to survival. Restructuring assistance is available and possible but timing and planning are key.

Ben comments “As ever, I would encourage directors to seek professional advice as early as possible in order to equip themselves as best they can for what may unfold. Avoiding this could result in catastrophic consequences for both the business and directors personally should the business enter formal insolvency in the future.”



About Cowgills

Cowgills is a leading independent firm of Chartered Accountants and Business Advisors based in the North West of England – from Greater Manchester to Liverpool. We use our sector experience to deliver tailored financial solutions and support for businesses.

Get in touch with our Head Office in Bolton, Greater Manchester, for any financial advice or get in touch with Ben Cowgill directly at ben.cowgills@cowgills.co.uk.

bounce back loan

The information was correct at time of publishing but may now be out of date.

Business Recovery
Posted by Ben Cowgill
23rd June, 2021
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