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Failing to repay your Bounce Back Loan can lead to severe financial and legal consequences.

The government-backed Bounce Back Loan Scheme (BBLS) was introduced to support businesses during the COVID-19 pandemic.

However, businesses unable to repay these loans face a series of repercussions, including debt collection actions, damage to credit ratings, and potential insolvency procedures. Understanding these implications is crucial for any business owner.

What happens if you don't pay your Bounce back Loan

Immediate Consequences of Defaulting on a Bounce Back Loan

Debt Collection Actions

If you miss a repayment, your lender will likely start by contacting you to understand your financial situation and attempt to arrange an alternative repayment plan. If these efforts fail, the lender may escalate the issue by engaging debt collection agencies to recover the outstanding amount.

Impact on Credit Score

Non-payment of a Bounce Back Loan will be recorded on your business credit file, significantly impacting your ability to secure future financing. A damaged credit score can limit your business’s financial flexibility and growth opportunities.

Legal and Financial Repercussions

Potential Legal Action

Persistent default on a Bounce Back Loan can result in the lender taking legal action against your business. This might involve court proceedings to recover the debt, which could include additional legal costs and interest charges.

Personal Guarantees

Although Bounce Back Loans typically do not require personal guarantees, fraudulent activity or gross misconduct could lead to personal liability. Directors could be held personally responsible if found guilty of misconduct or providing false information during the loan application process.

Insolvency Procedures

Company Voluntary Arrangement (CVA)

If your business is struggling with multiple debts, including a Bounce Back Loan, a Company Voluntary Arrangement (CVA) might be a viable solution. A CVA allows your company to negotiate a structured repayment plan with creditors, potentially reducing the overall debt burden.


In severe cases, where repayment is unfeasible, your business may need to consider liquidation. This could be either a Creditors’ Voluntary Liquidation (CVL) or a compulsory liquidation. Liquidation involves selling off company assets to repay creditors, and the business will cease to exist thereafter.

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Mitigating the Impact of Non-Payment

Seeking Professional Advice

It’s essential to seek professional advice if you’re unable to meet your loan repayments. Insolvency practitioners and financial advisors can provide tailored solutions to manage your debt and avoid severe repercussions.

Alternative Financing Options

Exploring alternative financing options can provide the necessary funds to manage existing debts. Refinancing existing loans or securing new lines of credit might offer temporary relief and help maintain business operations.

Government Support Programs

Stay informed about government support programs that might offer financial assistance or more flexible repayment options during times of economic hardship.


Failing to pay your Bounce Back Loan can have far-reaching consequences for your business, from debt collection actions to potential insolvency.

Understanding these risks and seeking professional advice early can help mitigate the impact and provide viable solutions to navigate financial challenges. Proactively managing your financial situation is crucial to ensure the long-term sustainability of your business.

For more detailed advice tailored to your specific circumstances, consider reaching out to Business Helpline. Our experts are dedicated to supporting directors across the UK, offering free help and advice to navigate financial uncertainties.

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    Andy Slinger

    Andy is Head of Marketing for Business Helpline with a wealth of experience Marketing in the financial sector. He has a passion for helping business owners struggling with debts.

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