Bounce Back Loans: Are Directors Liable?

In 2020, at the height of disruption to business caused by the pandemic, the government introduced the Bounce Back Loan Scheme. Under this, smaller businesses could apply for a loan ranging from £2,000 to £50,000 (or a maximum of 25% annual turnover) to help cover the costs and lost income that they had been facing.

These loans were provided by commercial lenders but were 100% guaranteed by the government.


Concerns were raised around potential abuse of these loans by directors and businesses who didn’t necessarily need them or would not use them for their intended purpose.

These concerns arose because many considered it too quick and east to access the scheme and receive a loan, as the form was just 7 questions long with the only additional requirement being that. The company was affected by the pandemic and hadn’t been in trouble in December 2019.

The Statistics

1.5 million loans were issues (estimated at a value of £47 billion)

25% of all UK businesses applied for the scheme

It is estimated that £4.9 billion worth of loans granted are a result of fraudulent claims.

Are Directors Personally Liable?

The loans received from the Bounce Back Loan Scheme MUST be used solely for the needs of the business outlined in the application. Directors who have misused this for their personal gain could be found guilty of fraud and are liable to personally repay the full amount they received under the scheme.

Two such directors who abused the scheme were investigated, found guilty and were issued a ban for a total of 21 years.


Directors who applied for a loan under the scheme while their company was insolvent or became insolvent shortly after application/receipt of the loan could be at risk. An insolvency practitioner will investigate the financial activity of the company leading up to the insolvency and may find the director to have misused the funds lent to them.

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