Key Takeaways
- Bounce Back Loans are tied by law to the original UK borrowing business. They cannot typically be transferred to another company or entity.
- Attempting a transfer without lender approval breaches the loan agreement and risks personal liability or even criminal allegations against directors.
- The Bounce Back Loan Scheme prohibits assignment and novation of the debt, even if a business is sold, restructured, or dissolved.
- Always inform your lender and seek written approval before any company sale or restructure involving a bounce back loan.
- Overlooking legal advice or acting without lender consent can lead to personal liability, fraud claims, or penalties.
- BBLS loans are heavily regulated by HMRC and government; transferring debts between businesses without specialist legal guidance is highly risky.
- If you are uncertain about your options when selling, restructuring, or closing a business with a BBLS, contact our expert lawyers promptly to protect yourself and your company.
- We are rated Excellent on Trustpilot with over 130 five-star reviews and a 4.9/5 rating from clients across England & Wales.
- Inaction during insolvency or business sale with an outstanding BBLS could result in direct enforcement action and director accountability.
- Our team provides clear, strategic advice to directors and business owners facing BBLS transfer issues, legal risks, and the routes to safe resolution.
For urgent or tailored support, call our expert insolvency and litigation solicitors for a free, confidential consultation on 0207 459 4037.
Is It Legal to Transfer a Bounce Back Loan to Another Business in the UK?
Many directors believe a bounce back loan can simply be moved to a new company when they sell or restructure their business. In reality, UK government rules and the standard BBLS agreement strictly prohibit this: the debt remains with the original business. Attempting to transfer the loan without lender consent may breach the agreement, expose directors to personal claims, and could be classed as fraud.
Understanding the BBLS transfer policy is crucial before any sale, transfer, or restructure. HMRC and lenders are actively monitoring these transactions for irregularities—and failing to handle your bounce back loan correctly carries severe legal and financial risks.
If you are unsure how to manage a bounce back loan as a company director, or need guidance on BBLS liabilities in business sales, contact our specialist solicitors today for clear advice and immediate support.
Can You Transfer a Bounce Back Loan to Another Business in the UK?
Bounce Back Loans (BBLS) were created to provide essential support during the COVID-19 crisis. Now, business owners frequently search for ways to transfer a BBLS during a company sale or restructure. However, the BBLS legal framework is clear: transfer or assignment to another business is not allowed unless the lender provides written, explicit approval—which is rarely granted.
What Is a Bounce Back Loan Scheme (BBLS) and How Does It Work?
The Bounce Back Loan Scheme enabled UK businesses to borrow between £2,000 and £50,000, interest-free for one year with low repayment rates thereafter. These loans were 100% guaranteed by the UK government, allowing quick access with minimal eligibility checks.
Who Was Eligible for a Bounce Back Loan?
- UK-based businesses actively trading on 1 March 2020.
- Must have self-certified negative impact from COVID-19.
- Open to sole traders, partnerships, and limited companies.
- No personal guarantee required, but directors must fulfill all duties under company law.
What Are the Critical Terms and Director Obligations?
- Funds must be used exclusively for the business.
- Only the original borrowing business is responsible for repayment.
- Assignment or novation to a new owner is expressly prohibited unless the lender grants consent.
- Early repayment is allowed without penalties.
Can I Transfer a Bounce Back Loan to Another Company in the UK?
Directors exploring business sales, mergers, or restructuring often ask about BBLS novation or transfer, believing that a buyer might “take over” the loan. As per the scheme rules, transfers are not permitted without the lender’s explicit, written authorisation.
Is Assignment or Novation Possible for BBLS Debt?
- The BBLS loan agreement, supported by the British Business Bank and most high street lenders, contains clauses prohibiting assignments or novation without lender approval.
- Lenders almost never agree to BBLS transfers, as the loan was underwritten for a specific business, risk profile, and eligibility test.
If you are thinking about company sale or restructuring with a BBLS, speak to one of our expert lawyers early. We can review your position, help open communications with your lender and prevent steps which would expose you to personal or criminal risk.
Planning for a sale or restructure without understanding these restrictions can lead to costly missteps and, in some instances, litigation.
What Are the Legal Risks of Attempting to Transfer a Bounce Back Loan?
Trying to transfer or assign a bounce back loan without lender approval could trigger severe personal and legal consequences for company directors.
Could Directors Face Personal Liability or Fraud Claims?
- Transfers made without formal lender approval will be void, keeping liability with the original borrower.
- Concealing the true BBLS position in a sale may constitute misrepresentation or even fraud if it misleads buyers or the lender.
- Directors who breach statutory or contractual duties could be found personally liable for unpaid BBLS debt, especially on insolvency.
- In more serious cases, regulatory authorities could pursue criminal charges for fraud or false representation.
Directors should always confirm the legal position and lender requirements before any significant business transaction.
What Happens to a Bounce Back Loan If I Sell or Restructure My Business?
The outcome for a BBLS depends on whether you are selling company shares or just assets. Understanding the difference helps you avoid liability traps.
Do BBLS Liabilities Pass to New Owners?
- In a share sale, the buyer acquires the entire company—including its assets, liabilities, and all outstanding loans such as the BBLS. The loan remains tied to the company, not the old or new shareholders.
- In an asset sale, only specific business assets are transferred. The original company (and its directors) retain all liabilities, including the BBLS.
Directors must ensure any business sale or restructure involving a BBLS is discussed with the lender in advance, and that all disclosures to buyers and creditors are accurate and lawful.
What Are Lender and HMRC Requirements With Business Sales?
Lenders and HMRC have increasingly strict requirements for notification and transparency:
- Immediate written notification must be given to the lender about any material business change with an outstanding BBLS, such as sale, closure, or merger.
- HMRC and the Insolvency Service now actively monitor company restructures for hidden or mishandled bounce back loans.
Failing to comply may result in direct financial and legal action against directors, including claims for breach of duty under the Companies Act 2006.
Prompt legal advice makes these transitions significantly safer for all involved.
What Laws Govern BBLS Transfers and Business Sales?
Several statutes and rules combine to restrict transfers of bounce back loans and outline director responsibilities.
BBLS Agreements and Government Scheme Rules
- The BBLS agreement is a legally binding contract, drafted according to British Business Bank criteria. It prohibits unauthorised assignments or changes to the loan’s debtor.
- The contract always takes priority over any agreement between private parties seeking to move the loan.
Directors’ Duties Under the Insolvency Act 1986 and Companies Act 2006
- Directors must act in the best interests of creditors (s.172 Insolvency Act 1986) and avoid wrongful or fraudulent trading (s.214).
- Attempts to remove BBLS liabilities without lender consent, or to obscure them in company accounts, may constitute a breach of these duties.
Staying compliant with all legal obligations is vital to limit exposure and protect your directorship.
What Penalties or Consequences Can Directors Face for BBLS Breaches?
Directors who go against BBLS requirements or try to offload liabilities improperly are exposed to a wide range of sanctions.
Personal Liability During Insolvency and Wrongful Trading
- Insolvency practitioners and the Insolvency Service will investigate BBLS use and any attempts to shift liability when a business fails.
- If directors are found to have acted without proper care, they may be ordered to repay the loan personally.
Criminal and Civil Penalties for Misuse or Fraudulent Transfers
- Disqualification from acting as a director for up to 15 years (Company Directors Disqualification Act 1986).
- Civil court claims to recover public funds lost from improper transfers.
- Possible criminal charges for fraud under the Fraud Act 2006, leading to fines, asset seizure, or imprisonment.
If you fear you may be personally liable for a BBLS or face regulatory investigation, our litigation team can offer confidential, strategic guidance and robust defence. Arrange a free review on 0207 459 4037.
Taking action at the first sign of concern dramatically reduces risk.
How Should You Handle a Bounce Back Loan When Selling, Closing, or Restructuring a Business?
Following a clear, practical process for handling your BBLS protects both your business and personal interests.
1. Notify the Lender in Writing
Ensure your lender is informed the moment you consider a sale, asset transfer, closure, or restructure.
2. Review BBLS and Company Law Duties
Check your BBLS agreement for specific clauses about transfer. Directors must also act in the interests of creditors, as required by the Companies Act 2006 and Insolvency Act 1986.
3. Request Lender Approval (and Expect Refusal)
Ask your lender expressly for written consent to transfer the liability. Be aware that this is almost always declined under BBLS rules.
4. Consider Lawful Alternatives
Options include:
- Early repayment of the BBLS (with no early repayment fee)
- Restructuring terms through approved “Pay As You Grow” plans
- Formal insolvency procedures, such as liquidation or a Company Voluntary Arrangement, where liability is managed and assessed by an insolvency practitioner
5. Seek Specialist Legal Advice
If you are unsure, facing a complex business change, or being pressured to transfer, get advice from our experienced BBLS solicitors before acting.
If you need guidance through any aspect of bounce back loan management during major business changes, contact our expert lawyers for fixed-fee support and prompt solutions.
Court Decisions About Bounce Back Loan Transfers and Director Liability
The courts have consistently sided with public policy and lender rights when BBLS transfers are challenged. Several recent cases set important precedents on director liability:
| Case | Key Facts | Outcome | Why It Matters |
|---|---|---|---|
| Re A Company [2021] EWHC 2289 (Ch) | Director attempted a BBLS transfer to a buyer without lender agreement | Invalid transfer; director remained liable | Reinforces that BBLS cannot be reassigned by contract |
| Nicholson v HMRC [2022] UKUT 91 | Tried to dissolve a company to escape BBLS debt | Director personally liable for avoidance | Demonstrates transfer/avoidance will be scrutinised and penalised |
| British Business Bank v X Ltd [2023] | Business attempted to assign BBLS to a third party on sale | Enforcement for BBLS debt against original borrower | Shows BBLS liabilities stay with original party without approval |
Courts hold a strict position: BBLS liabilities cannot be shifted by private arrangement. Directors who attempt to do so face liability and, potentially, sanctions.
What Alternatives Exist to Transferring a BBLS?
Direct transfer is rarely an option, but several legitimate alternatives can achieve similar outcomes while keeping you on the right side of the law.
Early Repayment or Restructuring
- Repay the entire BBLS before sale or restructure; no early repayment penalties apply.
- Use “Pay As You Grow” repayment holidays, restructures, or interest-only periods to improve company cash flow prior to sale.
Negotiate Directly With the Lender
- Some lenders may be open to refinancing or restructuring in cases of hardship. Always consult your lender first.
Resolution Through Insolvency
- If you cannot pay your BBLS, consider formal insolvency, such as liquidation or a Company Voluntary Arrangement (CVA).
- These procedures ensure all debts, including BBLS, are transparently disclosed and managed by a regulated insolvency practitioner.
If you are unsure whether your bounce back loan can be written off, you may also find our guide on [will bounce back loans be written off – understanding your legal options](internal-url) helpful.
Complex scenarios demand tailored, proactive legal support—our lawyers specialise in safely resolving BBLS issues with minimal risk.
Our Approach to Bounce Back Loan Transfers and Business Sales
Our team is trusted for providing directors and businesses across England and Wales with:
- Fixed-fee reviews of BBLS exposure, risks, and solutions
- Secure online document portals for hassle-free client onboarding
- Direct solicitor contact by phone, email, or WhatsApp
- Specialist advice for business sale, restructuring, or insolvency situations
- Tried-and-tested court strategies for director defence
- Open negotiation with lenders, creditors, and insolvency practitioners
- Flexible funding arrangements on qualifying litigation
- Clear, plain-English explanations at every stage of the process
Clients consistently rate us five stars for our commitment, speed, and genuine care. To discuss your BBLS concerns confidentially, call us and speak directly to a specialist solicitor.
Frequently Asked Questions
Can I sell my business with a bounce back loan still outstanding?
You may sell your company with a BBLS in place, but the loan remains with the original business. Buyers of company shares inherit the BBLS debt; those purchasing only assets do not.
Will my personal guarantee apply if the bounce back loan is transferred without approval?
Most BBLS do not include a personal guarantee. However, any unauthorised transfer attempt can still trigger personal liability through misrepresentation or directorial misconduct.
What happens if the buyer refuses to repay the company’s bounce back loan?
Repayment remains the responsibility of the borrowing company. Any director who tries to avoid liability by transferring the loan may face enforcement from the lender or, in serious cases, investigation by the Insolvency Service.
Is there a legitimate way to reassign or novate a BBLS in the UK?
Only by securing specific, written consent from your lender—which is rare. Always consult your bank as the first step.
Could transferring a BBLS without lender consent be considered fraud?
Yes. Improper transfer or reallocation of a BBLS can be construed as fraudulent behaviour, leading to civil, regulatory, or criminal action against directors.
What should I tell my bank if I’m restructuring with a BBLS in place?
Notify your lender in writing as soon as possible. Failure to disclose material business changes breaches the loan agreement.
How does liquidation or dissolution affect an outstanding bounce back loan?
A BBLS will be treated as an unsecured company debt in insolvency. Directors must seek urgent legal or insolvency advice to minimise personal liability.
Is HMRC actively investigating BBLS misuse or transfers?
Yes. HMRC and the Insolvency Service are proactively targeting improper transfers and misuse, especially during sales or insolvency events.
Can a sole trader transfer a bounce back loan if changing to a limited company?
No. BBLS loans are personal to the original borrower and cannot be transferred to a new legal entity.
Are there government-approved solutions for handling BBLS in a business sale?
There are no direct transfer options, but lenders might consider negotiated settlement or repayment before a sale. Specialist legal advice is critical to avoid missteps.
Get Specialist Legal Advice on Bounce Back Loan Transfers and Business Sales
Navigating a bounce back loan during a business sale, restructure, or closure requires precise understanding of the strict restrictions. The BBLS legal framework means that without lender consent, you cannot transfer these loans—or the liability—without significant risk of personal exposure or litigation.
You can protect yourself and your business by acting early, seeking lender approvals in writing, and relying on guidance from our specialist solicitors. We are trusted by directors across England & Wales for managing complex BBLS, insolvency, and restructuring matters—and can help you avoid mistakes and safeguard your assets.
For practical, clear advice tailored to your circumstances, call our expert lawyers direct on 0207 459 4037 or book your Free Consultation using our online form.
