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Bounce-back loan misconceptions


It seems that every other press release from the Insolvency Service at the moment announces more sanctions against individuals who have abused the Covid support schemes and in particular the Bounce-Back Loan scheme (“BBL”).  For example the latest included a director who applied for a BBL with three different lenders far exceeding the amount he was entitled to and an individual who spent £13,000 of the loan he received on various gambling sites.


One common misconception around BBLs is the position of personal liability.  It is true to say there is no personal liability for directors should the business fail, and the loan is not repaid.  However, something we are seeing at PBC is where the funds received from the BBL have been paid to the director, thereby creating a loan between the company and the director.  This loan is repayable.


If a director is concerned they may not be able to meet the BBL repayments, or if that has already occurred, directors should be aware this could constitute evidence of the company’s insolvency as it is not able to meet its debts as they fall due.  Upon reaching this point, the director’s legal duties switch from the shareholders to protection of the creditors as a whole.  It is at this point, at least, PBC recommend seeking advice.  Directors should not be wary about seeking advice (particularly if they have an adverse loan) as failing to do so may lead to the position becoming worse should liquidation occur at a later stage, as well as leaving them vulnerable to stepping on the “elephant traps” as we have previously mentioned here – .


Should you or your business have an issue with repaying a BBL (or for any other reason) then please contact a member of the Team at PBC Business Recovery & Insolvency on (01604) 212150 (Northampton office) or (01234) 834886 (Bedford office). Alternatively, you may send an email to or access our website at