Bounce Back Loan debt: What directors need to know in 2026

The Bounce Back Loan Problem

The Bounce Back Loan Scheme (BBLS) provided a critical lifeline during the pandemic, but many small business owners are now struggling with repayments as the economy shifts. Understanding your position as a director is vital.

Pay As You Grow (PAYG)

The government introduced PAYG to help struggling businesses. You can:

• Extend the loan term from 6 to 10 years (reducing monthly payments significantly).
• Take a repayment holiday of up to 6 months.
• Switch to interest-only payments for up to 6 months (available three times).

Director liability

BBLs are unsecured and do not require a personal guarantee. However, the Insolvency Service actively investigates cases where BBL funds were misused — for example, paying personal expenses, dividends, or transferring funds to related parties.

If your company genuinely cannot repay the BBL and you acted in good faith, formal insolvency (such as a Creditors' Voluntary Liquidation) may be the appropriate route. Our business debt advisory service can assess your situation confidentially.