A Bounce Back Loan was a government‑backed loan introduced in 2020 to help small UK businesses access fast, low‑interest funding during the COVID‑19 pandemic.

The Bounce Back Loan is a company debt, not a personal one

The Bounce Back Loan scheme aimed to protect small business owners from personal liability. Because the rules banned personal guarantees, the bank cannot pursue you personally for repayment.

When a company enters insolvency, the loan turns into a provable unsecured claim. The bank sends its claim to the liquidator, and if the company has no assets — which happens often — the bank then claims the shortfall from the government guarantee.

As a result, the debt ends with the company rather than the director.

The loan is written off through liquidation — not dissolution

Since 2024, banks and HMRC have actively blocked strike‑off applications for companies with unpaid Bounce Back Loans. They do this to ensure the debt is handled correctly.

Because of this, the only compliant way to close a company with a BBL is through a Creditors’ Voluntary Liquidation (CVL). This route provides structure, transparency, and legal protection.

A CVL also ensures:

• The company closes in the correct way
• The Bounce Back Loan is written off as part of the process
• You receive protection from future creditor action
• A licensed insolvency practitioner reviews and signs off your conduct

Consequently, thousands of directors now choose this route every month.

Director investigations: what actually happens

Every liquidation includes a routine review of director conduct. This step forms part of the standard process, so it shouldn’t cause alarm.

You only face risk if you clearly misused the loan, for example:

• Using the funds for personal spending
• Inflating turnover to borrow more
• Applying for the loan after the business had already stopped trading

However, most directors used their Bounce Back Loan for genuine business costs — wages, rent, suppliers, or survival. When that’s the case, the review usually ends quickly and without issue.

What about personal credit rating?

A Bounce Back Loan does not appear on your personal credit file. In addition, a company liquidation does not affect your personal credit score.

Your personal credit only changes if you personally borrowed money — and the BBL scheme did not allow that.

What happens after liquidation?

Once the company completes liquidation:

• The Bounce Back Loan is fully extinguished
• The bank claims the remaining balance from the government
• You can move forward without the company’s debt holding you back

Many directors start new businesses afterwards, and they face no restrictions when doing so.