The coronavirus pandemic had a catastrophic impact on many UK businesses. To support those that were struggling, and mitigate the effects of ongoing national lockdowns, the Government implemented a series of unprecedented financial measures, including the so-called ‘bounce back loan’. Government statistics show that, as of 31st July 2022, businesses had borrowed some £46.6 billion under the bounce back loan scheme.

Sole traders were amongst some of the hardest hit by the pandemic and thousands utilised the scheme in an effort to stay afloat. Now, many are facing the prospect of rebuilding their livelihoods whilst meeting their bounce back loan repayment obligations. So, what happens if you are a sole trader and can’t pay your bounce back loan? Is any help available, and can you write off a bounce back loan?

Speak to us if you are concerned about your bounce back loan repayments. We are a specialist firm of solicitors and barristers with vast experience assisting sole traders facing financial difficulties.

Call us today on 01908 414990, email us at or complete our free enquiry form and we will call you back.

What is a Bounce Back Loan?

 The bounce back loan scheme enabled small and medium sized businesses, including sole traders, to borrow up to £50,000 with the benefit of a low interest rate. The aim of a bounce back loan was to help the borrower through the economic problems brought about by the pandemic. Applicants were obliged to confirm that the funds would be used solely for business purposes such as staff wages, commercial rents, supplier invoices and utility bills.


When do you have to pay back a Bounce Back Loan?

 As its name suggests, a bounce back loan is not a grant, but a debt. As with any loan, it must be repaid. Repayment obligations begin 12 months after your businesses received the funds. The standard repayment term is 6 years, but this can be extended to 10.


What are your options if you are can’t pay back your Bounce Back Loan?

 Many businesses took out bounce back loans when facing an uncertain future. Prolonged lockdowns coupled with local restrictions meant that for some, their worst fears were confirmed, and their business could not survive. For many others who managed to keep trading, the effects of the pandemic were far-reaching, and they are yet to return to their pre-pandemic profitability.

The Government has recognised the issues facing these businesses and, in response, has introduced the ‘Pay As You Grow’, or ‘PAYG’, Scheme’. The scheme allows businesses additional time to repay their bounce back loan, and greater flexibility over the repayment terms.

Under the PAYG scheme, the options open to you are as follows:

  • You can reduce your monthly repayments by paying interest only for 6 months. You can do this three times over the term of your bounce back loan.
  • You can take a payment holiday for 6 months to give your business a chance to recover. You can do this once over the term of your bounce back loan.
  • You can request an extension of your loan term from 6 to 10 years, at the same low interest rate of 2.5%.

You should speak to your lender about the possibility of utilising any of the measures provided by the PAYG scheme.

Whilst the measures will come as a welcome relief for many, for some they do not go far enough. Trying to rebuild their business at the same time as repaying their bounce back loan is proving an impossible task and they are left wondering whether there is a possibility of writing it off.

Call us today on 01908 414990, email us at or complete our free enquiry form and we will call you back.

How to write off a Bounce Back Loan as a Sole Trader

A significant advantage of the bounce back loan scheme was that borrowers did not have to give personal guarantees. This was good news for company directors, who could continue to benefit from limited liability. Unfortunately for sole traders, however, the law does not differentiate their personal finances from those of their business, so they are personally liable to repay the bounce back loan.  One important caveat is that any recovery action cannot extend to your home or primary personal vehicle.

The reality is that you cannot simply ‘write off’ a bounce back loan as a sole trader. The only option is to enter into a formal insolvency arrangement. For example, you might be able to set up an Individual Voluntary Arrangement, pursuant to which you pay back to your creditors only what you can afford each month. Any interest or charges on your debts are frozen, and creditors cannot take enforcement action against you.

Another option would be to declare yourself bankrupt and start afresh. However, the effects of bankruptcy can be severe; your bank accounts may be frozen, your credit rating negatively impacted, and you may struggle to get credit in the future. It is, therefore, not a decision that should be taken lightly. We can help you to ascertain whether bankruptcy is the appropriate course of action for you.


How we can help if you are a Sole Trader who cannot pay back your Bounce Back Loan

If you are cannot repay your bounce back loan, speak to us. We understand how worrying financial problems can be, particularly given the fall-out from the pandemic. We couple our first-class legal advice with a practical, commercial approach. We will work with you formulate a strategy that protects your commercial interests and allows you to move forward with your business.


Call us today on 01908 414990, email us at or complete our free enquiry form and we will call you back.