Can You Write Off A Bounce Back Loan?

Can My Company Write Off Its Bounce Back Loan?No, you cannot write off a Bounce Back Loan. The Bounce Back Loan Scheme (BBLS) was introduced by the UK government in response to the COVID-19 pandemic to provide financial support to small and medium-sized businesses.

While the loans offered favorable terms and were 100% government-backed, they are not eligible for write-off or forgiveness. Borrowers are required to repay the loan amount in full, along with any applicable interest, within the agreed-upon repayment term.

It’s essential for businesses to understand their financial obligations and plan accordingly to repay the Bounce Back Loan to avoid any potential financial repercussions.

Can my Company Write off its Bounce Back Loan?

Whether or not your company can write off its Bounce Back Loan depends on the specific regulations and policies set by the government or lending institution that provided the loan. As of my last knowledge update in September 2021, Bounce Back Loans in the UK were not eligible for write-off or forgiveness.

These loans were intended to provide financial support to small and medium-sized businesses during the COVID-19 pandemic, but borrowers were expected to repay the full loan amount within the agreed-upon repayment term. It’s crucial to check with the relevant authorities or consult a financial advisor to get the most up-to-date information regarding any potential changes in loan forgiveness programs or policies.

What can you do if you can’t repay a Bounce Back Loan?

The government has foreseen the issues some companies will be facing in repaying these loans and have now introduced a Pay As You Grow (PAYG) scheme to try and combat some of these challenges.

The PAYG scheme was introduced as part of the Winter Economy Plan and is designed to help companies who have started to repay their Bounce Back Loans but are having difficulty in meeting the monthly repayments.

There are three main lifelines offered to companies through the PAYG scheme:

  • Bounce Back Loans can be extended from six years up to 10 years with the interest rate remaining fixed at 2.5%. Lengthening the term of the loan will make monthly repayments lower but you will pay more interest overall.
  • A six-month payment holiday can be taken meaning no repayments will be due during this time. This option can be taken once over the term of the loan.
  • You can opt to pay just the interest on their loan for a period of six months. This will lower the monthly repayment amount for those months. This option can be taken three times over the course of the loan.

While these options will provide additional time and breathing space during months of financial difficulty, the Bounce Back Loan will continue to run and the company will still be responsible for repaying the full amount borrowed.

Insolvent with a Bounce Back Loan

In situations of severe financial difficulties for your company, liquidation might become the only viable option. In such cases, business loans not personally guaranteed by a director can potentially be discharged. Bounce Back Loans, being exempt from personal guarantees, can be written off during the liquidation process, as the lender can leverage the government’s guarantee to recover their funds.

However, it is essential to note that company dissolution is solely applicable to solvent companies, making it unsuitable to attempt dissolving your company while a loan is outstanding. If you were to pursue this path, your bank would likely object to the application with Companies House, possibly prompting an investigation into your actions. To navigate these challenging financial circumstances appropriately, seeking professional advice is highly advisable.

Read more: Can I dissolve a company with a bounce back loan

Frequently asked questions

Can a bounce back loan be written off?

No, a bounce back loan cannot be written off, the only way to write off a bounce back loan is to enter into a business recovery plan via a formal insolvency arrangement

Can sole trader write off bounce back loan?

No, a sole trader cannot write off bounce back loan. The only way to write off a sole trader bounce back loan is to enter a formal insolvency process, such as an IVA or bankruptcy.


In conclusion, if you are facing insurmountable financial difficulties and find yourself unable to repay your Bounce Back Loan, the only viable option for potential loan write-off is by entering an insolvency process. This path may involve liquidation or other appropriate insolvency procedures.

However, navigating these complex processes requires expert guidance and professional advice to ensure the best outcome for your business. Take the necessary steps now by completing our online enquiry form to connect with our experienced team of financial advisors.

We are here to help you understand your options, guide you through the insolvency process, and provide the support you need to achieve the best possible resolution for your unique situation. Don’t delay; act today to secure the future of your company and find relief from your financial burden.

Steve Jones Profile
Insolvency & Restructuring Expert at Business Insolvency Helpline

With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.