Bounce Back Loans Under Fire:
Are Directors Now Personally at Risk?

The UK's Bounce Back Loan Scheme (BBLS) was introduced in 2020 to help small businesses survive the Covid-19 crisis. Lenders could provide loans from £2,000 up to 25% of a company's 2019 turnover (maximum £50,000). The application process was deliberately streamlined, enabling companies to access funds quickly at a time of acute financial pressure.

Several years on, the position has shifted significantly.

Bounce Back Loans are now a major area of regulatory focus. The Insolvency Service has been actively investigating the circumstances in which loans were obtained and how those funds were subsequently used.

The Scale of Enforcement

The scale of enforcement is notable. In 2024–25 alone, more than 1,000 directors were disqualified, with approximately 71% of those cases linked to COVID-related financial support. Disqualification periods of up to 15 years have been imposed, alongside compensation orders requiring repayment of the loan, frequently with interest.

Courts have shown little hesitation in treating inaccurate applications or misuse of funds as falling below the standards expected of company directors, even where the original intention was not dishonest.

Recent High Court Cases

In a decision made in February 2026, the High Court imposed an 11-year director disqualification and a compensation order against the sole director of a company for serious misuse of the Bounce Back Loan Scheme.

The company declared a 2019 turnover of £220,000 despite its accounts and bank records showing it was effectively dormant with no meaningful turnover. Within five weeks of receiving the loan, £49,997.50 had been withdrawn — none of which was used for legitimate business purposes.

In another recent case, the High Court imposed a nine-year director disqualification. The director applied for a £20,000 BBL declaring a turnover of £80,000, when professionally prepared accounts showed turnover below £20,000. The same day the loan was paid in, the full £20,000 was transferred out of the company.

Key Takeaways for Directors

We are seeing a marked rise in cases where directors are being challenged over how BBL funds were obtained or used. While some involve clear fraud, many arise from more ordinary situations: misunderstandings around eligibility, miscalculations of turnover, or assumptions about how funds could be used.

The practical advice to directors is straightforward:

• Keep full records of your BBL application documents
• Only use BBL funds for genuine business needs
• If you receive any notice from the Insolvency Service, seek professional legal advice immediately
• A well-prepared response at the outset can materially affect the outcome
• A well-prepared response can, in appropriate cases, distinguish between deliberate abuse and an honest error

Directors who have any uncertainty regarding the basis of their application or the use of funds should consider taking legal advice at an early stage. The way a director responds at the outset can make a significant difference to the final outcome.