What To Do If You Can’t Pay Bounce Back Loan (CBILS)

What To Do If You Can’t Pay Bounce Back Loan (CBILS)


Nearly £50 billion was handed out in bounce back loans, and obviously, this needs to be paid back. However, as these businesses were struggling at the time of applying for a loan, it is no surprise then that many have found themselves unable to meet repayments. Not all companies came out of the pandemic in a financially solid position. So, what can occur if you cannot pay back your CBILS?

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During the pandemic, the government recognised the need for giving assistance to all the different sized companies operating in the UK. They, therefore, introduced three types of loans for small to large businesses, at reduced interest rates, and with deferred payments.

According to Statista, the total amount of bounce back loans that met with approval was 1,560,309, between May 2020 and May 2021. In just the first six weeks of the scheme saw 860,00 bounce back loans being approved.

Indeed, around 90% of all businesses that applied for one of these Covid assistance loans, met with approval.

Nearly £50 billion was handed out in bounce back loans, and obviously, this needs to be paid back. However, as these businesses were struggling at the time of applying for a loan, it is no surprise then that many have found themselves unable to meet repayments. Not all companies came out of the pandemic in a financially solid position. So, what can occur if you cannot pay back your CBILS?

What Was The Reasoning Behind Bounce Back Loans?

As the pandemic spread, it impacted all kinds of businesses. Clearly, hospitality and tourism were affected. Airlines were largely grounded, and the high street lost much of its footfall.

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The government responded by putting together three different schemes to help companies continue operating, and then to recover. These were as follows:


This was known as the Bounce Back Loan Scheme. It was aimed at sole traders and micro-businesses. Up to £50,000 could be requested with this loan scheme.


This was the Coronavirus Business Interruption Loan Scheme. It allowed a higher level of borrowing than the BBLS and was aimed at small to medium-sized companies. Up to £50 million could be borrowed through this option.

The CLBILS offered the largest amount of borrowing and was aimed at medium-sized to larger types of businesses. With this scheme, up to £200 million could be borrowed.

The idea was to help businesses that had seen their operations either interrupted or were experiencing financial distress. This could mean that cash flow had been disrupted, revenue had dropped, or the business was experiencing lockdowns and was unable to operate at times. The loan schemes were designed to help businesses ride out the pandemic, and then return to recovery afterward.

What Can Occur If You Fail To Repay A CBILS?

There are different strategies for improving cash flow, and one of them is to take out a loan. Of course, this means putting the company into more debt, but sometimes this type of financial assistance can work if carefully thought out.

However, many companies that take out extra financing then find themselves in difficult times once again when the repayments have to be made. This is when companies start to face insolvency.

The BBLS was 100% guaranteed by the government, therefore it is unsecured. If a trader fails to repay this loan, they may face debt collection action. However, if this fails then the government has to meet its guarantee.

With CBILS, the consequences of not repaying the loan are slightly different. If the loan was less than £250,000, you will be personally accountable for it. If a company took out a higher amount then a personal guarantee would have been required. Very often this would have been company directors which means they have a liability to repay the loan too.

Who Can Provide Support When You Are Struggling To Service A Bounce Back Loan?

Firstly, if you are unable to meet your repayment options, then you are already insolvent. This term refers to a person or enterprise that is unable to meet its financial commitments. Generally, this means that a company no longer has sufficient cash flow to pay its suppliers or meet other debts such as loan repayments.

It may also be that the value of a company’s assets does not meet the outstanding debt. When this occurs it can be hard to return to normal financial health. Therefore, it is vital that the right advice is sought.

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An insolvency practitioner can give advice, and work on behalf of a business to guide them through their options, and negotiate with creditors. In this example, that would be whoever approved the CBILS.

A list of insolvency practitioner services can be seen if you click here, or alternatively, keep reading the article for more details.

What Are The Options When You Cannot Meet Your Bounce Back Loan Repayments?

The first thing anyone facing insolvency should do is to stop panicking. Clear and professional advice is required at this time. And all the options available should be looked at and considered.

There are different finance options for small and micro business owners, and bigger companies can use different strategies when they find themselves in a state of insolvency. Many of the businesses that took out CBILS loans, however, were of the small to medium variety. If you are struggling to pay back one of these government back loans, then you must get to know your options.

Here are options available for any business unable to meet its CBILS obligations:

  • Company voluntary arrangement
  • Company administration
  • Creditors’ voluntary liquidation

You can read about these options in more detail below.

Company Voluntary Arrangement

This can only be set up through the use of an insolvency practitioner. Yet, it is a viable choice for getting out of debt. An insolvency practitioner (IP), will negotiate on your behalf to arrange to pay back the loan in a manner that satisfies both parties. This can mean reducing payments and extending the loan period.

Company Administration

Administrators would take over management of the company but with a view to keeping the business operating. They may sell assets, and they may look for a buyer to purchase the firm. This is done to avoid liquidation, and therefore keep jobs safe, and the business running.

Creditors’ Voluntary Liquidation

This is truly the last option and one that many businesses with CBILS loans will have to take. If a personal guarantee has been made on the loan, then liquidation may be the only viable way to clear the debt.

One concern with liquidating when a CBILS has been taken out is that there may be an investigation. Wilfully avoiding debt through liquidation may result in implications of misconduct, and even prosecution.

What Can You Do If You Took Out A BBLS And Cannot Repay It?

If you are in the same position as a company that took out a CBILS and cannot repay, then your options are similar.

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An insolvency practitioner should be sought out, and repayments should continue to be made, even if they are reduced. This can mean entering into an IVA. This is the individual version of the company’s voluntary arrangement, and an IP can help to negotiate a repayment plan for you.


If you are struggling with repaying your BBLS or CBILS, then you can find a licensed practitioner through a government website, or by searching on the net.

Ideally, advice from an insolvency practitioner should be sought while you still have some of the loan money left. Once it is clear that you will be facing insolvency in the future, seek advice. The quicker an IP is approached, the faster your debt problems can be fixed.

Please Note: This article does not constitute financial advice and is for information purposes only. Please seek advice from a licensed financial advisor before making any decisions.
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