Should Bounce Back Loan repayments for SMEs be scrapped?

July 21, 2022     |     Posted by:     |     Category: Blog, debt stress, HMRC Arrears

Difficult trading conditions can occur at any time. What the UK is facing right now, off the back of a pandemic, is several worst-case scenarios happening at the same time. So, it’s understandable that business owners want to be cut a bit of slack.

What’s happening?

As we write this blog, UK inflation has risen to 9.4%. Costs for products and services are rising at their fastest rate for 40 years and in some industries, the costs are being absorbed by the company because they simply cannot afford to pass on to the client.

Petrol prices currently stand at an average 184p per litre. Global gas prices have seen energy price caps increase by £693 in April 2022, with further increases due in October.

Consumers and businesses are generally cutting back on their spending as a result of the cost of living crisis. This is not what small businesses need following 2 years where trading was limited or halted entirely, and they took on additional finance to plug the shortfall.


Pressure to support SMEs

There is mounting pressure on the Government to ‘do more’ to support businesses and individuals from this potentially crippling wave of pressure on finances. Things such as the Energy Bill Support Scheme and Cost of Living payments for those on benefits are providing additional one-off payments to help towards increased costs. But what about businesses?

The Bounce Back Loan (BBL) scheme was introduced in 2020 to support SME businesses affected by the COVID-19 pandemic. They could borrow between £2,000 and £50,000 at a low interest rate, guaranteed by the Government. At the time, this appeared to be a logical response to the needs of business owners who couldn’t trade as normal. Repayments didn’t start until 12 months after the first payment when the belief was that normal trading would have resumed.

For many industries, normal trading standards resumed much later on, if at all. Understandably these business owners feel under additional pressure with the rising cost of living on top of finance repayments (for a loan they never wanted or budgeted for in the first place).


Should the Government scrap Bounce Back Loan repayments for SMEs?

Some business owners have decided to take action into their own hands and we’re aware of petitions circulating across social media. They’re calling for the Government to scrap BBL repayments to help with the cost of living crisis.

Whilst we sympathise with their situation, we just can’t see that happening.

Over £47 bn has been approved in BBLs since May 2020, including the top-up loans which came in from November 2020. That’s a huge amount of borrowing for the Government to foot the bill for as acting guarantor.

Bounce Back Loans offer repayment terms of 6 to 10 years so there is a long road ahead for these loans to be repaid, hopefully in better trading conditions as normality continues to phase back into our lives.

As tempting as it is, please do not default on your BBL repayments as this could have serious consequences for you and your company.


What to do if you’re struggling to repay your Bounce Back Loan

We are talking to business owners every day who have concerns over repaying creditors. On a daily basis they are fighting to keep on top of cashflow challenges but understandably in today’s conditions, they are struggling to see how it will ever improve.

Speaking bluntly, the best thing you can do is speak to an insolvency practitioner about your situation. Here’s why:


We’re here to help. We won’t judge or be surprised at what you have to say – more than likely we’ve heard it all before! This could be the step you need to ease the pressure and help you move forward. Call us on 0808 196 8676 or email

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