The Directors Helpline

3. What UK directors need to know about bounce back loan repayments

by Jonathan Cooper

Macclesfield-based The Directors Helpline has over 15 years’ experience supporting company directors on a wide range of issues – from general financial information, through to business recovery, restructuring and company closure. This is the third in a series of articles aimed at small business owners and company directors.

Thousands of small business owners across the UK – including many here in Macclesfield – took out Bounce Back Loans (BBLs) in good faith to keep their businesses afloat during the pandemic. 

Having launched in May 2020, BBLs provided small businesses with fast access to funds between £2,000 and £50,000 – capped at of 25% of their turnover – and businesses didn’t have to make any repayments for the first 12 months of their loan.

Fast forward to today, however, and many directors are still struggling to meet repayments, with pressure mounting and enforcement action on the rise.

At The Director’s Helpline, we support over 600 company directors every month and we’re hearing a consistent message that many business owners are facing BBL pressure, often feeling overwhelmed, isolated, and unsure of what to do next.

An important takeaway for directors to note is that they are not alone, and they do have options.

Struggling with repayments doesn’t make directors fraudsters

We hear too often from directors who fear judgment or legal action simply because they can’t repay their BBL. But falling behind on repayments doesn’t mean they’ve done something wrong.

The reality is that many businesses never fully recovered from Covid disruptions – rising costs, changing customer habits, and high inflation have hit small businesses hard. Not to mention the employers’ National Insurance hike that came into effect in April.

While the scheme has undoubtedly helped many companies to survive, it has also left some with debt they were never realistically going to be able to repay.

What happens if directors can’t repay their bounce back loan?

Recent Department for Business and Trade data states that of the £46.5 billion loaned through the BBL Scheme, 68.84% of loans are either fully repaid or being paid on time. It also highlights that around 4.5% of businesses have fallen behind on repayments, and nearly 1% have already defaulted. So far, the Government has stepped in to cover nearly a quarter of all loans under the scheme. 

If a company is unable to repay its BBL, and is at risk of becoming insolvent, it’s crucial to understand the potential implications and seek impartial advice early.

Directors can face serious consequences if they ignore the problem or continue trading while insolvent. In the worst-case scenario, they could be held personally liable – especially if the loan was misused, transferred improperly, or used after the business was no longer viable.

While most directors are honest people simply trying to do the right thing, without obtaining guidance on the options available to them, they risk making uninformed decisions that could lead to avoidable financial and legal trouble.

That’s why seeking impartial and confidential advice early is essential, to understand what routes are open, avoid escalating the situation, and put a plan in place that protects both the individual and the business.

This can help directors to assess their company’s financial position, explore repayment options, understand the implications of insolvency, and access legal and restructuring guidance.

The earlier business owners seek advice, the more options they’ll have, and the more likely they are to avoid long-term damage.

For any UK business owners worried about their Bounce Back Loan, the key is not to suffer in silence. Addressing concerns early allows directors to explore all available solutions before problems escalate.