Should I pay back my bounce-back loan?

The Government’s bounce-back loan scheme has come under fire for some months, with suggestions that, in some instances, the loans should not be repaid. Here we take a look at the arguments for and against repaying the loans.

Let's start with a little bit about the bounce-back loan scheme:

The Government’s bounce-back loan scheme was introduced in response to the Covid-19 pandemic and offers loans of up to £50,000 to small businesses. The loans are 100% guaranteed by the Government, have a fixed interest rate of 2.5%, and are available to businesses that were trading on 1 March 2020 to help them through the pandemic. Repayable over six years, the loans can also be repaid early without penalty. A staggering 860,000 bounce-back loans were approved in the first six weeks of the pandemic.

Arguments for repaying the loans

The main argument for repaying the loans is that it is the right thing to do. The loans were implemented to help businesses through a difficult time, and if these businesses are doing well, they should repay the loans so that the money can be used to help others who did not fare well. Another argument for repaying the loans is that it will help to build confidence in the scheme. If they’re repaid, it will show that the scheme is working and that businesses benefit from it. This will encourage other businesses to apply for loans and help ensure the scheme is successful.

Arguments against repaying the loans

The opposing argument is that many businesses simply cannot afford to pay these loans back. We all know that the pandemic has had a devastating effect on many businesses, and it will come as no surprise that some businesses that have been particularly impacted, such as leisure and hospitality, may be unable to afford to repay the loans and continue to trade. Another argument against repaying the loans is that it could discourage businesses from applying for them in the first place. If businesses think they will be expected to repay the loans, they may be less likely to apply for them.


There are arguments for and against repaying the Government’s bounce-back loans. It is important to remember that Bounce Back loans are a business debt, not a business grant, and consequently have strict terms and conditions attached to them. Our professional advice to companies and sole traders who did apply for a bounce-back loan during the course of the pandemic would be to, wherever possible pay it back. Ultimately, your unpaid loan is an unsecured debt, which can be included in any insolvency procedures.

There are several options, such as a Company Voluntary Arrangement, a Creditors Voluntary Liquidation and more. So if you would like to discuss your options with a professional, the team would be more than happy to help.

For more information please contact

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