The company cannot repay the Bounce Back Loan. Are you personally liable?

How the scheme worked

Bounce Back Loans were issued between May 2020 and March 2021: up to £50,000 or 25% of turnover, six years at 2.5%, nothing to pay for the first year, and no credit check worth the name. The government guaranteed the lender 100%. Lenders were specifically barred from taking a personal guarantee from the director. If the company is liquidated, the bank claims in the liquidation, then claims the shortfall under the guarantee. It does not come to you.

Where the protection stops

1. The money did not go into the business. Paying it to yourself, buying a personal asset or lending it to family is misuse. The liquidator will trace it and treat it as a loan you owe back.
2. The application was not accurate. Overstated turnover, or a company already in difficulty at 31 December 2019, accounted for 736 of the 1,036 director disqualifications in 2024-25, with bans commonly running six to eleven years.
3. The loan paid you or a connected party ahead of other creditors. That is a preference and a liquidator can reverse it.
4. The company traded on with the loan when it should have stopped. The loan is not the problem; trading past the point of no return is.

If none of those apply, the loan is a company debt that dies with the company.

What the liquidator will ask

When the loan was drawn and the bank balance that day. Where the money went in the following 90 days, payment by payment. The turnover figure on the application against the accounts. Whether payments went to directors or connected parties. Whether the company was already behind with HMRC.

What to do today

1. Pull the bank statements for the 90 days after drawdown and annotate where the money went.
2. Find the original application and check the turnover figure against the accounts.
3. Ask the lender what Pay As You Grow options are still open.
4. If the company cannot pay its debts, speak to a licensed practitioner about the whole position, not just the loan.