If your limited company still has a Bounce Back Loan and you are thinking about closing the business, it is natural to worry about what happens next.
You may be asking whether the company can be liquidated, whether the loan will be written off, whether the lender can object to strike-off, and whether the debt could become your personal responsibility.
The answer depends on how the loan was applied for, how the money was used, whether the company can repay what it owes and whether the directors acted properly. In many cases, genuine business failure is different from Bounce Back Loan misuse. The important step is to check your position before trying to close the company.
⚠️ Worried your Bounce Back Loan could become personal?
A Bounce Back Loan was a company loan, not a personal loan. However, directors can still face issues if the loan was misused, the application was inaccurate, funds were taken personally, or the company is closed in the wrong way.
If your company has an outstanding Bounce Back Loan, do not try to dissolve or strike off the company without checking your position first. The lender, HMRC or another creditor may object, and a formal closure route may be needed.
Not sure where you stand? Check whether your Bounce Back Loan could affect you personally. Complete our quick form to request a callback, or call 0800 1804 935.
Can I close a company with a Bounce Back Loan?
Yes, a company can usually be closed with an outstanding Bounce Back Loan, but the right route matters.
If the company cannot repay the Bounce Back Loan and is insolvent, a Creditors’ Voluntary Liquidation may be the appropriate way to close it. In a CVL, a licensed insolvency practitioner is appointed, company debts are dealt with through the liquidation process and the director’s conduct is reviewed as part of the statutory process.
What directors should usually avoid is trying to strike off or dissolve a company as though there are no debts. A Bounce Back Loan is still a company liability. If it remains unpaid, the lender or another interested party may object to strike-off, and the company may need a formal closure process instead.
If the company borrowed and used the Bounce Back Loan properly, ordinary business failure does not automatically mean the director becomes personally liable. Personal risk is more likely to become an issue where there are concerns about misuse, false information, personal spending, improper withdrawals or other misconduct. Our guide to Insolvency Act sections explains the common legal references directors may see.
Check if your Bounce Back Loan could affect you personally
If you are worried about closing a company with a Bounce Back Loan, answer a few quick questions. We’ll help you understand whether the loan is likely to remain a company debt, whether personal risk needs to be reviewed and what closure route may be appropriate.
What should you check first?
Before deciding on the right option for your company, check our quick overview table, which explains the implications of some common Bounce Back Loan scenarios.
| If this applies | Why it matters |
|---|---|
| The Bounce Back Loan was used for normal business costs | This is usually different from personal use or misuse. The loan may remain a company debt, but the full position still needs to be checked. |
| The money was transferred to directors personally | This may need closer review, especially if the payments were not salary, dividends, repayment of a valid loan account or a legitimate business expense. |
| The company cannot repay the loan | A formal insolvency route such as Creditors’ Voluntary Liquidation may be needed if the company cannot pay what it owes. |
| You are thinking about strike-off | Strike-off is generally not suitable where the company still has unpaid debts, including a Bounce Back Loan. |
| The company has other debts | HMRC arrears, supplier debts, rent, finance agreements or unpaid wages can affect the safest route for closure. |
| The business may still recover | Repayment options, restructuring or rescue routes may be worth considering before deciding to close. |
Unsure whether the loan could affect you personally?
Tell us what happened with the Bounce Back Loan and we’ll help you understand the next step confidentially.
Will I be personally liable for a Bounce Back Loan?
In many cases, directors are not personally liable for a Bounce Back Loan simply because the company cannot repay it.
Bounce Back Loans were company loans. They did not require personal guarantees, so ordinary business failure does not automatically make the loan a personal debt of the director.
However, personal risk can become an issue if there are concerns about how the loan was applied for, how the money was used, or how the company was run after receiving the funds.
This is why it is important to separate genuine business failure from misuse or director misconduct.
When directors are usually not personally liable
If the company applied for the Bounce Back Loan correctly, used the money for legitimate business purposes and later failed because it could not trade profitably, the outstanding loan will usually be treated as a company debt.
In that situation, if the company is insolvent, the Bounce Back Loan can be dealt with through a formal insolvency process such as Creditors’ Voluntary Liquidation.
Examples of ordinary business use may include using the loan to pay:
- rent or business premises costs
- staff wages
- suppliers
- business insurance
- utilities
- stock or materials
- other company overheads
If the loan was used properly but the company still cannot repay it, the director should take advice before trying to close the company. The key question is usually how the company should be closed, rather than whether the loan automatically becomes personal.
When a Bounce Back Loan can create personal risk
Personal risk is more likely where there are concerns about misuse, false information or improper conduct.
This can include situations where:
- the company was not eligible for the loan when it applied
- the application included inaccurate information
- the loan was used for personal spending rather than business purposes
- funds were transferred to directors without a clear business reason
- the loan was used after the director knew the company could not continue
- company money was withdrawn improperly before liquidation
- the company tried to strike off while leaving the loan unpaid
- records do not show how the loan was used
These issues do not always mean the director will be personally liable, but they do need to be reviewed carefully. In liquidation, the insolvency practitioner will look at the company’s affairs and report on director conduct.
If you are worried that the Bounce Back Loan was not handled correctly, it is better to ask for advice early rather than waiting for a lender, HMRC or liquidator to raise questions later.
Worried about how the loan was used?
We can help you understand whether the Bounce Back Loan is likely to remain a company debt, or whether personal risk needs to be reviewed before closure.
Will my conduct be reviewed if the company enters liquidation?
Yes. If the company enters liquidation, the liquidator has a duty to review the conduct of the directors before and during the period leading up to insolvency.
This does not mean every director has done something wrong. It is a standard part of the liquidation process.
Where a Bounce Back Loan is involved, the liquidator may consider:
- whether the company was eligible for the loan
- whether the loan application appears accurate
- how the funds were used
- whether company records support the use of the money
- whether directors took money from the company improperly
- whether creditors were treated unfairly
- whether the company continued trading when it could not pay its debts
If the loan was applied for and used properly, this review may simply form part of the normal liquidation process. If there are concerns, the liquidator may need to investigate further.
What happens to a Bounce Back Loan in liquidation?
If a company enters Creditors’ Voluntary Liquidation with an outstanding Bounce Back Loan, the loan is treated as a company debt.
The lender becomes one of the company’s creditors. The liquidator will review the company’s assets, liabilities and records, then deal with creditors through the liquidation process.
If the company has assets, those assets may be sold or realised. Funds are then distributed according to the statutory order of priority. If there are not enough funds to repay all creditors, some debts may remain unpaid at the end of the liquidation.
Where the Bounce Back Loan was taken out and used properly, the unpaid balance will usually remain with the company and be dealt with through the liquidation. The director should not usually have to repay it personally just because the company failed.
The position may be different if there are concerns about misuse, false information, improper withdrawals or director misconduct.
How does the CVL process deal with BBL debt?
If Creditors’ Voluntary Liquidation is the right route, the process usually involves:
Reviewing the company’s position
An insolvency specialist reviews the company’s debts, assets, trading position and Bounce Back Loan history.
Checking how the loan was used
The use of the Bounce Back Loan is reviewed as part of the company’s overall financial position. Good records can help show how the funds were spent.
Placing the company into liquidation
If the directors decide to proceed, a licensed insolvency practitioner is appointed and the company enters liquidation.
Dealing with creditors
The Bounce Back Loan lender, HMRC, suppliers and other creditors are dealt with through the liquidation process.
Closing the company properly
The liquidator completes the required statutory work, reports on director conduct and brings the company to an orderly close.
Need to close a company with BBL debt?
If repayment is no longer realistic, Anderson Brookes can explain whether CVL is likely to be the right route and what it means for you as a director.
Can I strike off a company with a Bounce Back Loan?
Strike-off is generally not suitable if the company still has an unpaid Bounce Back Loan.
A Bounce Back Loan is a company debt. If the loan has not been repaid, trying to dissolve the company as though it has no liabilities can create problems. The lender, HMRC or another creditor may object to the strike-off, and the company may remain on the register until the issue is dealt with.
This is different from closing a debt-free company that has stopped trading and has dealt with its assets. If the company still owes money, a formal process may be needed so creditors are dealt with properly.
If your company has an outstanding Bounce Back Loan, take advice before filing DS01 or allowing a strike-off application to continue.
| Situation | What directors should consider |
|---|---|
| The company is debt-free and no longer needed | Strike-off may be suitable if the company meets the conditions and all assets and obligations have been dealt with. |
| The company still owes a Bounce Back Loan | Strike-off is unlikely to be the right route without advice. The loan remains a company liability and may lead to objections. |
| The company has other debts as well | HMRC, suppliers, rent, finance agreements or wage arrears can make a formal insolvency route more appropriate. |
| The company has already applied for strike-off | You may need to withdraw the application or respond to an objection before deciding the correct closure route. |
Check before trying to dissolve the company
If the Bounce Back Loan is still unpaid, Anderson Brookes can help you understand whether strike-off is suitable or whether a formal closure route is needed.
If the business might still recover
If the business is still viable, closing the company may not be the only option. Before deciding to liquidate or close, directors should consider whether the company can realistically recover and continue trading.
This depends on the company’s cash flow, other debts, trading prospects, creditor pressure and whether Bounce Back Loan repayments can be managed.
Pay As You Grow options
Some Bounce Back Loan borrowers may be able to use Pay As You Grow options to manage repayments. Depending on the lender and the company’s position, this may include extending the loan term, making interest-only payments for a period, or taking a repayment holiday.
These options can reduce short-term pressure, but they do not remove the debt. They may also increase the total amount owed over the life of the loan. If the company is already insolvent or has no realistic prospect of recovery, repayment flexibility may not be enough.
Speaking to the lender
If the company is struggling with repayments but may still be viable, directors should speak to the lender as early as possible. The lender may explain what repayment options are available and what happens if payments are missed.
Directors should also consider whether there are other debts that need attention, such as HMRC arrears, rent, supplier balances or wage liabilities.
Restructuring or rescue options
If the business has a realistic future but cannot deal with debts in their current form, restructuring options may be worth considering.
Depending on the circumstances, this could include informal creditor discussions, HMRC Time to Pay, a Company Voluntary Arrangement or administration. The right route depends on whether the business can trade profitably, whether creditors are supportive and how serious the debt position has become.
When closure may be the more realistic option
In some cases, repayment flexibility will not solve the problem. If the company cannot pay its debts, has no realistic recovery plan and is under increasing pressure from creditors, closure may need to be considered.
Signs that closure may be more realistic include:
- the company cannot afford Bounce Back Loan repayments
- HMRC arrears are increasing
- suppliers, landlords or lenders are chasing payment
- the company is no longer trading profitably
- there are unpaid wages, rent, tax or supplier balances
- the directors are using personal funds to keep the company going
- there is no clear route back to sustainable trading
If this sounds familiar, it may be time to review whether Creditors’ Voluntary Liquidation is more appropriate than trying to keep the company open.
Unsure whether recovery is realistic?
We can help you understand whether the company has options to continue, or whether closure through liquidation should be considered.
How to close a company if the Bounce Back Loan cannot be repaid
If the company cannot repay its Bounce Back Loan and has no realistic route back to stable trading, the safest next step is usually to review the company’s full position with a licensed insolvency practitioner.
This review should look at the Bounce Back Loan, other company debts, HMRC arrears, assets, employees, trading position and how the loan funds were used.
If Creditors’ Voluntary Liquidation is the right route, the process can bring the company to an orderly close and deal with creditors through the correct formal process.
Review the company’s debts
List the Bounce Back Loan, HMRC debts, supplier balances, rent, finance agreements, unpaid wages and any other company liabilities.
Check how the Bounce Back Loan was used
Gather bank statements, payment records and any notes showing how the loan was spent. This can help show whether the funds were used for business purposes.
Consider whether the business can recover
If the business still has a realistic future, repayment options, restructuring or rescue routes may be worth reviewing before closure.
Take advice before attempting strike-off
If the company still owes a Bounce Back Loan or other debts, strike-off is unlikely to be suitable without advice. A creditor or lender may object, and a formal closure process may be needed.
Use the correct closure route
If the company cannot pay what it owes, Creditors’ Voluntary Liquidation may be the right route. The company is placed into liquidation, creditors are dealt with and the liquidator completes the required statutory work.
Why speak to Anderson Brookes?
Closing a company with an outstanding Bounce Back Loan can feel worrying, especially if you are unsure whether the loan could affect you personally.
Anderson Brookes can help you understand the position before you take action. We will review the company’s circumstances, explain the likely closure options and help you understand whether there are any personal risk issues that need closer attention.
We can help you consider whether:
- the Bounce Back Loan is likely to remain a company debt
- the loan appears to have been used for business purposes
- director conduct issues may need to be reviewed
- strike-off is unsuitable because debts remain
- Creditors’ Voluntary Liquidation may be the correct route
- the company has any realistic rescue or repayment options
We can also walk you through what to do if HMRC, the lender or other creditors are chasing. Our initial advice is free and confidential. You can ask about your Bounce Back Loan position without committing to proceed.
Check your Bounce Back Loan position
If you are worried about closing a company with BBL debt, speak to Anderson Brookes before trying to strike off or dissolve the company.
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Frequently asked questions
Can I close a company with a Bounce Back Loan?
Yes, a company can usually be closed with an outstanding Bounce Back Loan, but the route matters. If the company cannot repay the loan and is insolvent, Creditors’ Voluntary Liquidation may be more appropriate than strike-off.
Will I be personally liable for a Bounce Back Loan?
Not automatically. Bounce Back Loans were company loans and did not require personal guarantees. If the company borrowed and used the loan properly but later failed, the loan will usually be treated as a company debt. Personal risk is more likely where there are concerns about misuse, false information, personal spending or director misconduct.
What happens to a Bounce Back Loan in liquidation?
The Bounce Back Loan is treated as a company debt. The lender becomes a creditor in the liquidation. If the company has assets, these may be realised and funds distributed according to the statutory order of priority.
Can a Bounce Back Loan be written off in liquidation?
If the company enters liquidation and there are not enough funds to repay all debts, the unpaid balance may remain unpaid as part of the company’s insolvency. The position can be different if there are concerns about misuse, false information or improper withdrawals.
Can I strike off a company with a Bounce Back Loan?
Strike-off is generally not suitable if the company still has an unpaid Bounce Back Loan. The loan remains a company liability, and the lender or another interested party may object. Directors should take advice before filing DS01 or allowing strike-off to continue.
What if I used the Bounce Back Loan for normal business costs?
If the loan was used for legitimate business costs, such as rent, wages, suppliers, utilities, stock or other overheads, that is usually different from personal use or misuse. The company’s wider position still needs to be reviewed before closure.
What if some Bounce Back Loan money was paid to me personally?
This should be reviewed carefully. Some payments to directors may have a legitimate basis, such as salary or repayment of a valid director loan account, but unexplained or improper withdrawals can create issues. Take advice before closing the company.
Will the liquidator investigate the Bounce Back Loan?
The liquidator will review the company’s affairs and director conduct as part of the standard liquidation process. Where a Bounce Back Loan is involved, they may review the application, eligibility, use of funds and company records.
What if the company cannot afford Bounce Back Loan repayments?
If the business may still recover, repayment options or restructuring may be worth considering. If the company cannot pay its debts and has no realistic recovery plan, liquidation may need to be reviewed.
Can Pay As You Grow help?
Pay As You Grow options may help some companies reduce short-term repayment pressure. However, these options do not remove the debt and may increase the total amount owed over time. They may not be enough if the company is already insolvent.
What if HMRC and suppliers are also owed money?
Other debts can affect the safest route. If the company owes HMRC, suppliers, rent, wages or finance agreements as well as a Bounce Back Loan, directors should take advice before attempting strike-off or continuing to trade.
Should I keep trading if the company cannot repay its Bounce Back Loan?
If the company cannot pay its debts as they fall due, directors should take advice before continuing to trade. The right step depends on whether the business has a realistic recovery plan and whether continued trading could worsen the position for creditors.
Can Anderson Brookes help me close the company?
Yes. Anderson Brookes can review the company’s position, explain whether liquidation or another route may be suitable, and help you understand whether the Bounce Back Loan creates any personal risk concerns.
Worried about closing a company with a Bounce Back Loan?
If your company still owes a Bounce Back Loan, do not try to strike off or dissolve it without checking your position. Anderson Brookes can help you understand your options confidentially.