Have Bounce Back loans (BBLs) benefitted business – or created a debt burden

Have Bounce Back loans (BBLs) benefitted business – or created a debt burden

Covid bounce back loans were introduced by the Government in early 2020 in response to difficulties experienced by small businesses during the Covid 19 Pandemic and subsequent lockdowns.

These schemes provided by the Government to support small businesses included:

  • Coronavirus Business Interruption Loan Scheme (CBILS)
  • Bounce back loan scheme (BBLS)

The aim of the CBILS was to reduce the economic impact of the pandemic by offering loans to SMEs from accredited lenders, with a guarantee from the British Business Bank of up to 80% of the loan. Loans were interest free for the first 12 months and offered overdraft, invoice finance and asset finance with lending up to £5m over terms of up to 6 years.

It is known that by May 2020 there was low approval of the CBILS scheme with only 50% of applications being approved, which led to the Government announcing a new Bounce Back Loan Scheme on 27 April 2020.  The scheme was intended to help SMEs apply for loans of between £2,000 and £50,000.

The Government agreed to guarantee 100% of these loans with no interest or fees payable for the first 12 months. There were no repayments for the first 12 months and the term of the loan was up to 6 years. It was reported that within the first two weeks of launch 80% of applications received were approved.

The Recovery Loan Scheme

There have been various extensions and amendments made to the offering of bounce back loans, most recently in July 2022 – with the announcement of an extension for applications to the CBILS replacement known as The Recovery Loan Scheme for a further 2 years past the proposed June 2022 end date.

The Government reports that the value of approved Covid loan applications now exceeds £46.6 billion with more than 1.5 million applications being approved.

Recovery of loan value

Bounce back loans are classed as unsecured debt and should there be a default on repayment, lenders will pursue in the same manner as they would with any other unsecured lending. Although the Government has offered a guarantee for loans, guarantees only come into effect when both the lender and an appointed debt collection agency have exhausted all avenues for collection.

A Government report confirms that as of 31 July 2022, £4.7 billion has been fully repaid by borrowers and £8.4 billion of loans have been defaulted on.

There are many businesses who have made genuine applications and received funds from the Bounce Back Loan Scheme. However, the Government has reported that their approved lenders have flagged £1.1 billion of applications which they suspect to be fraudulent, of which £408 million has been recovered from the Government under their guarantee. The Government are actively pursuing director disqualifications and recovery of funds from those deemed to have obtained a bounce back loan fraudulently.

Is your business struggling to repay a Bounce Back Loan or CBIL?

With continuing economic uncertainty, soaring interest rates, excessive utility bills and shortage of staff availability, many businesses are facing substantially reduced trade, delayed orders and increased costs.   This combination is having an adverse impact on cashflow and working capital with ongoing obligations being difficult to maintain.

Offer of support for small businesses

If you are struggling to meet your commitments or worried this may arise in the future, now is the time to discuss these worries with a professional, experienced advisor.  You can consider your options and assess how best to navigate a way forward.   To support the business community our experienced and trusted advisory team are offering:

  • Free of charge initial consultation to discuss business affairs
  • Free of charge follow up consultation to discuss actions and protection measures to safeguard from a future insolvency
  • Conducting an independent business review providing a report setting out an action plan and options. This is being offered at a substantially reduced rate from as little as £250 + VAT which will be quoted in advance.


It’s never too early to get in touch.

One of our Business Advisors and licenced Insolvency Practitioners can help. Contact Christine Convy [email protected] or Angela Paterson [email protected] for a free initial consultation. Tel: (01592) 630085 or (01382) 250695  www.dunedinadvisory.com

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