The short answer
A Bounce Back Loan was 100% government-guaranteed and unsecured, with no personal guarantee — so if your company genuinely cannot repay and is wound up, you are not personally liable, provided the loan was used properly for the economic benefit of the business. If it was misused (for example paid to yourself or drawn when the company didn’t qualify), a liquidator can pursue you personally. Before insolvency, the Pay As You Grow options may ease repayment.
Hundreds of thousands of small companies took a Bounce Back Loan, and many now cannot repay. The key worry — “am I on the hook personally?” — has a clear answer that turns entirely on how the money was used. This guide sets out the repayment options while the company still trades, what happens to the loan in liquidation, and exactly when it becomes a personal risk.
Bounce Back Loan at a glance
- Personal guarantee None — not required by the scheme
- Government guarantee 100% to the lender
- Personally liable if used properly No
- Personally liable if misused Yes — liquidator can pursue
- Pre-insolvency help Pay As You Grow options
- Written off in liquidation If properly used and company insolvent
The starting point: no personal guarantee
The Bounce Back Loan Scheme deliberately required no personal guarantee and no security, and the government guaranteed 100% of the loan to the lender. That means the loan sits with the company. If the company is genuinely insolvent and is liquidated, the loan is written off along with its other unsecured debts — it does not automatically become your personal debt.
When the loan does become your problem
The protection is tied to proper use. The loan had to provide an economic benefit to the business and the company had to have been eligible. A liquidator must investigate, and you can be pursued personally if, for example:
- You paid the loan to yourself or connected parties rather than using it for the business.
- You borrowed more than the rules allowed (up to 25% of turnover, capped at £50,000).
- The company was not trading or not eligible when it applied.
- The loan funded a preference — e.g. repaying a director’s loan ahead of other creditors.
Before insolvency: Pay As You Grow
If the company is still trading but repayments are a stretch, the scheme’s Pay As You Grow options (arranged with your lender) can include extending the term, taking interest-only periods, or pausing payments for a time. These can buy room without any insolvency procedure — worth exploring first if the business is fundamentally viable.
If the company can’t recover
Where the business is no longer viable, a CVL closes it and writes off the loan with other unsecured debts — assuming proper use. Trying instead to strike the company off to escape the loan is the wrong move: lenders and the Insolvency Service can object, restore and investigate, and dissolving a company to avoid a Bounce Back Loan has been a specific enforcement target.
Bounce Back Loan you can’t repay, and not sure where you stand?
A licensed insolvency practitioner can confirm whether the loan is a company debt that will simply be written off, or whether anything needs addressing first — confidentially, before you act.
Frequently asked questions
Am I personally liable for my company’s Bounce Back Loan?
Not if the loan was used properly for the business and the company was eligible — there was no personal guarantee, so it is a company debt that is written off if the company is liquidated. You can be pursued personally only if the loan was misused.
Can I just close the company to avoid the Bounce Back Loan?
Striking off a company that owes a Bounce Back Loan is not appropriate. Lenders and the Insolvency Service can object, restore the company and investigate. A CVL is the proper route and, with honest use, writes the loan off.
What is Pay As You Grow?
A set of repayment-easing options for Bounce Back Loans arranged with your lender — extending the loan term, interest-only periods, or a short payment holiday — for companies that are still viable but need breathing room.
Will a liquidator investigate how I spent the loan?
Yes. Reviewing the use of any Bounce Back Loan is a standard part of the liquidator’s statutory investigation. Legitimate business spending is fine; money extracted for personal benefit can be recovered.
Does the 100% government guarantee mean I don’t have to repay?
No. The guarantee protects the lender, not the borrower. The company still owes the loan; the guarantee only means the government covers the lender if the company cannot pay.
Sources & further reading
- GOV.UK / British Business Bank — Bounce Back Loan Scheme rules and Pay As You Grow
- Insolvency Act 1986 — preferences and transactions at undervalue
- The Insolvency Service — enforcement on dissolved companies and Bounce Back Loans
- Company Directors Disqualification Act 1986
This guide is general information, not formal insolvency advice. Your situation must be assessed by a licensed insolvency practitioner before you act.