What is the interest rate on the Bounce Back Loan Scheme?

The scheme’s interest rate is fixed at 2.5% per annum. The government covers the first 12 months of interest, meaning borrowers pay 0% interest in the first year.

Can Bounce Back Loans be written off?

Bounce Back Loans generally can’t be written off – you are responsible for repaying the loan. If you can't pay it back, you should talk to your lender about your options.

Do Bounce Back Loans still exist?

The Bounce Back Loan Scheme (BBLS) closed on 31st March 2021. However, businesses may find other types of Bounce Back Loan help available from banks or government programs.

Are HMRC investigating Bounce Back Loans?

Yes, HMRC is investigating some Bounce Back Loans. They are checking if any loans were wrongly given or if people misused the scheme. It’s best to make sure your loan is valid and follows the rules.

Can I take a payment holiday on a Bounce Back Loan?

The first 12 months of your loan are payment-free as standard. After that, you may be able to take one additional repayment holiday of up to 6 months through the Pay As You Grow scheme. Speak to your lender to check your eligibility.

Will a Bounce Back Loan affect my credit score?

Yes, a Bounce Back Loan can affect your credit score. If you make your payments on time, it may help improve your score. However, if you are struggling to repay and miss payments, it could lower your score. If you miss payments, your lender may: Report arrears to credit agencies Begin collections activity Take legal action Pursue recovery through insolvency proceedings

Are there any early repayment charges for a Bounce Back Loan?

No, there are no early repayment charges for a Bounce Back Loan. This means you can pay off your loan early without any extra fees.

What happens if I default on a Bounce Back Loan?

If you default, your lender may report arrears to credit agencies, begin collections activity, or take legal action. The government guarantee protects the lender – not you. Contact your lender as soon as possible if you're struggling, as early action gives you more options.

Can directors be personally liable for a Bounce Back Loan?

No personal guarantee was required for a Bounce Back Loan. However, directors can still face personal liability if they misuse funds, trade irresponsibly, or fail to follow proper procedures if the company becomes insolvent. Always seek professional advice if insolvency looks likely.

Will lenders chase me personally for a Bounce Back Loan?

Because no personal guarantee was required, lenders generally can't pursue you personally for repayment. However, if directors are found to have acted improperly – such as misusing funds or fraudulent application – personal liability may arise. Seek legal advice if you're concerned.

Can Bounce Back Loans be refinanced?

Yes. Many businesses have used debt consolidation or alternative finance to refinance their Bounce Back Loan into more manageable terms. This can help improve cash flow, especially if your business has grown since the original loan was taken out.

Does insolvency clear a Bounce Back Loan?

If a company enters insolvency, the Bounce Back Loan becomes a debt of the company – not the director personally (provided the loan was used properly and directors acted responsibly). However, insolvency is a complex process with serious consequences. Always take professional legal and financial advice before proceeding.

A Guide to Bounce Back Loans

Quick summary: Bounce Back Loans must be repaid under the Pay As You Grow scheme, with options to extend the loan term up to 10 years, take temporary payment holidays, or switch to interest-only periods. If you can't repay, contact your lender as soon as possible.

The Bounce Back Loan Scheme helped millions of UK businesses access emergency funding during the pandemic. Although the scheme has now closed, many businesses are still managing bounce back loan repayment schedules – and looking for guidance on what to do next.

Whether you’re reviewing repayments, exploring a Bounce Back Loan extension, or wondering what happens if you can’t pay it back, this guide explains your options in plain English.

What was the Bounce Back Loan Scheme (BBLS)?

The Bounce Back Loan Scheme was a government-backed loan introduced in May 2020 to support businesses affected by COVID-19.

It offered fast access to funding with simple eligibility criteria and favourable terms. Key features included:

Loans from £2,000 to £50,000
Borrow up to 25% of turnover
Fixed interest rate of 2.5%
No repayments for the first 12 months
No personal guarantees required
100% government guarantee to lenders
No early repayment fees

The end date for new applications was 31st March 2021. However, these loans remain active and must still be repaid.

Bounce Back Loans criteria

The business Bounce Back Loans criteria were simple. Businesses had to:

Be based in the UK
Have been trading before March 2020
Confirm they were impacted by COVID-19
Self-certify turnover for loan calculation
Not be in insolvency proceedings

These rules made it easy to access support quickly – but repayments are still the borrower’s responsibility today.

What should you do if you have a Bounce Back Loan?

If you still have a Bounce Back Loan, here's where to start:

Review your repayment terms
Check Pay As You Grow eligibility
Assess cash flow impact
Speak to your lender early
Consider refinancing

Managing your Bounce Back Loan repayment

If you’re currently making Bounce Back Loan repayment instalments, the government’s Pay As You Grow gives you several options:

Request an extension from 6 years to 10 years
Make interest-only payments for up to 6 months (up to three times)
Take one full repayment holiday of up to 6 months

These options can reduce monthly costs but may also increase the total interest paid. Let’s look at an example of an extension, assuming an interest rate of 2.5%.

Loan amount	Term	Monthly repayment	Total interest
£25,000	6 years	£374	£1,948
£25,000	10 years	£236	£3,281

Note: figures are illustrative and may vary slightly depending on lender calculations.

By extending the loan from 6 to 10 years, the monthly repayment falls by around £138, which can significantly help day‑to‑day cash flow. However, the longer term means you’ll pay around £1,330 more in interest overall.

A Bounce Back Loan extension can help cash flow, but it’s worth weighing the long-term cost.

Can I get a Bounce Back Loan top-up?

Top-ups were allowed during the scheme if you originally borrowed less than 25% of turnover. However, new top-ups are no longer available now the scheme has closed.

If you’re looking for additional funding, it may be worth exploring alternative finance options instead.

What happens if you can't pay your Bounce Back Loan?

If you’re struggling to pay or need Bounce Back Loan help, the most important step is to contact your lender early. They may offer:

Payment flexibility
Repayment holidays
Term extensions
Temporary support options

Ignoring the problem can lead to serious consequences. If you miss payments, your lender may:

Report arrears to credit agencies
Begin collections activity
Take legal action
Pursue recovery through insolvency proceedings

To avoid this, make sure you:

Review your repayment schedule
Check eligibility for Pay As You Grow options
Speak to your lender early
Consider refinancing options
Seek professional financial advice if needed

Taking action early can make managing repayments easier.

Are Bounce Back Loans to be written off?

There has been speculation that Bounce Back Loans may be written off, but in most cases this isn’t true. Businesses remain responsible for repayment. The government guarantee protects the lender, not the borrower.

If a business becomes insolvent, the outcome will depend on the circumstances. Directors must still act responsibly and follow their legal duties.

Can I apply for CBILS if I have a Bounce Back Loan?

When both schemes were active, businesses could refinance one into the other, but not hold both simultaneously. Today, both schemes are closed to new applicants.

However, having a Bounce Back Loan doesn’t automatically prevent you from applying for other forms of business finance. Lenders will assess:

Current turnover
Cash flow
Existing debt levels
Repayment history

Many businesses that took out Bounce Back Loans have since secured additional funding to support growth.

Directors’ responsibilities

Although the BBLS didn’t require a personal guarantee, directors must still:

Act in creditors’ best interests
Avoid misuse of funds
Maintain proper financial records
Seek advice if insolvency is likely

Closing a company to avoid repayment without following proper procedures could create personal risk.

Common Bounce Back Loan mistakes to avoid

Many businesses struggle with their Bounce Back Loan because they leave things too late. Watch out for these common mistakes:

Ignoring repayment difficulties – the sooner you act, the more options you have
Assuming loans will be written off – in most cases they won't be, and waiting can make things worse
Not using Pay As You Grow options – many eligible businesses don't realise help is available
Misusing loan funds – loans must be used for business purposes; misuse carries legal risk
Delaying conversations with lenders – lenders are generally more flexible when approached early

Looking beyond your Bounce Back Loan

The BBLS was designed as short-term emergency support, and many businesses now need more flexible funding to grow. Options may include:

If your business has outgrown its original Bounce Back Loan, restructuring finance could help improve cash flow.

Whether you’re considering an extension, worried you can’t meet repayments, or exploring funding beyond your original loan, understanding your options can help you make confident decisions.

Need more than a bounce back? Apply today to support your next stage of growth.