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Can You Get a Business Loan While Repaying a Bounce Back Loan? UK Guide

By Jodhbir Mehmi | Mehmi Financial Group

Last reviewed: 25 October 2026 | United Kingdom

Yes, you can potentially get another business loan in the UK while still repaying a Bounce Back Loan. Having an outstanding Bounce Back Loan does not automatically prevent a limited company, sole trader or partnership from applying for additional business finance.

However, lenders will consider your existing Bounce Back Loan balance, monthly repayments, recent business performance, credit history and ability to afford further borrowing.

The British Business Bank explicitly confirms that businesses with previous Bounce Back Loan Scheme (BBLS) borrowing are not automatically excluded from the newer Growth Guarantee Scheme (GGS). It also confirms that businesses using Pay As You Grow repayment support can still be considered for additional finance, subject to eligibility and lender approval.

The key question is not simply whether you have a Bounce Back Loan. It is whether your business can sustainably repay the new financing alongside its existing commitments.

For example, a UK limited company repaying £400 per month on a Bounce Back Loan may still qualify for an additional working capital facility if its current cash flow comfortably supports both obligations.

Another company with the same Bounce Back Loan balance but persistent overdrafts, declining sales and missed repayments may struggle to obtain further credit.

This guide explains how UK lenders assess businesses with outstanding Bounce Back Loans, which financing options may be available, whether you can refinance an existing Bounce Back Loan and how Pay As You Grow affects future borrowing.

Can You Apply for Another Business Loan With an Outstanding Bounce Back Loan?

Yes. There is no general UK-wide rule prohibiting businesses from obtaining ordinary commercial finance simply because they have an existing Bounce Back Loan.

The Bounce Back Loan Scheme was an emergency government-backed financing programme introduced during the COVID-19 pandemic.

It did not create a permanent restriction preventing participating businesses from accessing all future commercial lending.

However, your outstanding Bounce Back Loan remains a financial liability that new lenders must consider.

A prospective lender may examine:

How much remains outstanding.
Whether repayments are up to date.
The current monthly repayment amount.
Any Pay As You Grow arrangements.
Existing loans, overdrafts and other debt.
Business revenue and operating cash flow.
Recent financial performance.
The purpose of the additional borrowing.
The proposed new repayment schedule.

A company making its Bounce Back Loan repayments consistently may demonstrate a useful payment history.

However, that does not automatically establish that additional borrowing is affordable.

The British Business Bank confirms that lenders assessing additional finance consider existing income, expenditure and total debt exposure, including Bounce Back Loan commitments.

Source: British Business Bank — Bounce Back Loan Scheme FAQs.

What Was the Bounce Back Loan Scheme?

The Bounce Back Loan Scheme was introduced in May 2020 to help qualifying UK businesses obtain funding during the coronavirus pandemic.

It provided eligible businesses with access to government-backed loans through participating commercial lenders.

The scheme closed to new applications and top-ups on 31 March 2021.

Its principal original features included:

Loans from £2,000 to £50,000.
A maximum generally equivalent to 25% of the business's qualifying annual turnover.
A fixed interest rate of 2.5% per annum.
An original six-year repayment term.
No borrower repayments during the first 12 months.
Government coverage of interest during the first year.
A 100% government guarantee provided to the lender.
No personal guarantees required under the scheme.
Early repayment permitted without early repayment fees.

Eligible borrowers could subsequently access Pay As You Grow options to adjust their repayment schedules.

The scheme's closure means you cannot apply for a new Bounce Back Loan or obtain another BBLS top-up in October 2026.

However, businesses with outstanding loans may continue repaying them under their applicable contractual arrangements.

Source: British Business Bank — Bounce Back Loan Scheme.

Does the 100% government guarantee mean you do not have to repay?

No.

This is one of the most important distinctions for business owners.

The Bounce Back Loan Scheme provided a government guarantee to participating lenders.

The guarantee was designed to protect the lender against qualifying losses.

It did not make the borrowing business exempt from repayment.

The borrower remains responsible for the outstanding Bounce Back Loan and applicable interest.

For limited companies, the company is ordinarily the borrower. Directors are not automatically personally liable solely because they are directors.

However, separate legal consequences can arise from fraud, misuse of funding, misconduct or other circumstances that create personal liability.

The government guarantee should never be interpreted as permission to disregard the debt.

How Does a Bounce Back Loan Affect a New Business Loan Application?

An existing Bounce Back Loan can affect a new financing application in several ways.

1. It increases the company's total debt

A new lender will assess the complete debt position rather than treating the proposed facility in isolation.

Suppose a company has:

£18,000 outstanding on its Bounce Back Loan.
£12,000 outstanding on equipment finance.
A £5,000 business overdraft balance.

Its total outstanding borrowing is £35,000 before any new loan is added.

If the company requests another £25,000, its total borrowing could increase to £60,000.

That does not automatically mean the application will be declined.

However, the lender needs to establish whether the business can support the additional financial commitments.

2. Existing repayments reduce available cash flow

Revenue is not the same as cash available for debt repayments.

A business may generate substantial sales but have little remaining after payroll, stock purchases, rent, taxes and other operating costs.

The Bounce Back Loan repayment must therefore be included in the company's affordability calculations.

3. Payment history influences underwriting

Lenders may examine whether repayments have been made consistently.

An established record of meeting obligations can provide useful information.

However, repeated missed payments, unresolved arrears or default may raise questions about current affordability and credit risk.

4. Pay As You Grow may change the repayment schedule

Some businesses have extended their Bounce Back Loan terms or used temporary repayment relief.

A prospective lender may need to understand the current schedule and what payments will become due after the relief period.

5. The lender may consider the business's financial recovery

A business that borrowed during the pandemic may have experienced substantial changes in trading performance since 2020 or 2021.

Current bank statements and financial accounts may be more informative than the historic circumstances under which the Bounce Back Loan was originally obtained.

A lender will generally want to understand the company's financial position today.

How Much Additional Business Finance Can You Get With a Bounce Back Loan?

There is no standard UK borrowing limit specifically for businesses with outstanding Bounce Back Loans.

The amount available depends on the lender, financing product and applicant's financial circumstances.

A company that originally received a £50,000 Bounce Back Loan is not automatically restricted to a particular amount of additional commercial borrowing.

Equally, repaying most of a Bounce Back Loan does not create an entitlement to new credit.

A lender may consider:

Annual and monthly turnover.
Profitability and operating margins.
Available cash flow.
Existing principal balances.
Total monthly debt repayments.
Credit history.
Available security or eligible receivables.
Funding purpose.
Proposed repayment period.

Some businesses may qualify for a relatively small working capital facility.

Others may be considered for larger asset-backed or government-supported financing arrangements.

The maximum amount a lender advertises is not the same as the amount your business can afford or will be approved to borrow.

Example: Can a Company Afford a New Loan While Repaying a Bounce Back Loan?

Consider a hypothetical Birmingham-based distribution company.

It has recovered from the disruption experienced during the pandemic and now generates regular commercial revenue.

The company wants £20,000 to purchase additional stock.

Its estimated monthly financial position is:

Cash available after essential operating expenses, but before debt repayments: £2,900.
Existing Bounce Back Loan repayment: £350.
Existing equipment finance repayment: £450.
Proposed new business loan repayment: £900.

If the new loan is approved, the company's combined monthly debt repayments would be £1,700.

That would leave approximately £1,200 after those repayments, before any additional cash requirements excluded from the calculation.

Its simplified cash coverage would be approximately 1.71 times.

That may provide a starting point for an affordability assessment.

However, suppose the business experiences a quieter month and has only £1,500 available before debt repayments.

The same £1,700 repayment requirement would create a £200 shortfall.

The lender must therefore consider whether the company's financial performance is consistent enough to support the proposed loan.

These are illustrative figures, not an actual lending decision, lender affordability threshold or formal debt service coverage ratio. A complete analysis also considers taxes, working capital changes, capital expenditure and other commitments.

What can business owners learn from this example?

An outstanding Bounce Back Loan is not necessarily the primary obstacle.

The more important consideration is whether the combined financing obligations remain affordable during normal and weaker trading conditions.

Can You Get a Growth Guarantee Scheme Loan While Repaying a Bounce Back Loan?

Yes, potentially. The British Business Bank explicitly permits eligible businesses that previously accessed the Bounce Back Loan Scheme to apply for financing supported by the Growth Guarantee Scheme.

The Growth Guarantee Scheme is a government-backed commercial financing programme administered by the British Business Bank.

It launched in July 2024 and remains open for applications through accredited lenders.

The scheme supports several financing structures, including:

Business term loans.
Commercial overdrafts.
Asset finance.
Invoice finance.
Asset-based lending.

Under the operational terms published in October 2026, facilities can generally reach £2 million per business group, subject to applicable scheme and regional restrictions.

The scheme provides participating lenders with a 70% government-backed guarantee.

However, the borrower remains fully responsible for repaying the debt.

Does an existing Bounce Back Loan affect the GGS borrowing amount?

Potentially.

The British Business Bank explains that businesses with previous BBLS, CBILS or Recovery Loan Scheme borrowing are not automatically excluded from GGS.

However, existing scheme borrowing, applicable subsidy rules and current debt obligations may reduce the amount available under a new facility.

The lender must also determine that the proposed borrowing is affordable and supported by a viable business proposition.

Can you use GGS after accessing Pay As You Grow?

Yes, subject to eligibility.

The British Business Bank's Growth Guarantee Scheme FAQs expressly address this question.

They confirm that using one or more Pay As You Grow options does not automatically prevent eligibility.

However, the participating lender can still consider the company's overall finances and repayment commitments.

Important 2026 update

In July 2026, the UK government announced an expansion of GGS, including additional lending capacity, a planned increase in the turnover threshold from £45 million to £54 million and greater flexibility for longer facility terms.

As of the October 2026 guidance reviewed, the British Business Bank still described the scheme as operating under existing terms while these enhancements were being implemented.

Businesses should verify which conditions are operational through their chosen accredited lender.

Sources:

Can You Get Another Business Loan While Using Pay As You Grow?

Potentially.

Pay As You Grow (PAYG) was introduced to provide qualifying Bounce Back Loan borrowers with greater repayment flexibility.

It does not automatically prevent applications for additional business funding.

However, the revised repayments may affect how a new lender assesses affordability.

Option 1: Extend the loan term from six to ten years

Eligible borrowers can extend the original repayment term from six years to ten years at the same fixed interest rate of 2.5%.

This can reduce monthly repayments.

However, spreading the outstanding balance over a longer period generally increases the total interest paid.

A lower repayment amount does not mean the debt has been reduced.

Option 2: Make interest-only payments for six months

Eligible borrowers can temporarily make interest-only payments for six months.

The option is available up to three times during the loan's term, subject to the applicable arrangements.

During the interest-only period, the principal balance generally does not decrease.

Option 3: Take a six-month repayment holiday

Eligible borrowers can request one six-month full repayment holiday.

During this period, normal payments are suspended, but interest continues accruing.

The overall borrowing cost can increase.

Will using Pay As You Grow hurt your chances of getting another loan?

Not automatically.

The British Business Bank states that using PAYG does not itself affect the borrower's credit rating.

However, it can influence a new lender's creditworthiness assessment.

For example, a business currently making only interest payments may later need to resume larger normal repayments.

A new lender may assess the future repayment schedule rather than relying exclusively on the temporarily reduced payment.

Do not assume that a lower Pay As You Grow repayment means the business can permanently afford more borrowing.

Source: British Business Bank — Bounce Back Loan Scheme Pay As You Grow.

Can You Get a Business Loan if You Have Missed Bounce Back Loan Payments?

Potentially, but unresolved arrears can significantly restrict financing options.

A lender will usually distinguish between occasional historic payment problems and continuing financial distress.

One isolated missed payment

An isolated missed payment may require an explanation and supporting information.

The lender might ask whether it resulted from a banking error, short-term cash flow problem or another circumstance.

An isolated event does not automatically mean every provider will decline the application.

Repeated missed payments

Repeated missed instalments may indicate that the company cannot consistently support its existing obligations.

A lender may be concerned that additional borrowing would worsen the position.

A defaulted Bounce Back Loan

A loan that has entered formal default or recovery proceedings creates more serious concerns.

A prospective lender may review the company's financial condition, outstanding liabilities, credit information and any relevant legal action.

Certain financing products may become unavailable.

What should you do if you are struggling to repay?

Contact the existing Bounce Back Loan lender before missing further payments where possible.

Ask whether any repayment support remains available, including Pay As You Grow options or another agreed arrangement.

Do not simply cancel Direct Debits or assume that a request for assistance automatically changes the agreement.

Businesses with substantial financial difficulties should consider independent debt advice before seeking additional borrowing.

For businesses declined by a mainstream bank, read our Business Funding After a Bank Decline UK guide.

What Financing Options Are Available With an Outstanding Bounce Back Loan?

Businesses that remain financially viable may be able to explore different types of financing, depending on the amount required and the intended use.

1. Unsecured business loans

An unsecured business loan may be suitable for a company seeking working capital without pledging a particular asset as security.

The lender may assess recent trading, credit history, existing debt and repayment capacity.

An outstanding Bounce Back Loan does not automatically disqualify every applicant.

However, unsecured lenders can apply strict affordability requirements.

Some also request directors' personal guarantees.

2. Secured business loans

Secured business loans use agreed assets as collateral.

Potential security can include eligible commercial property, equipment or other business assets.

A lender may consider a secured financing proposal differently from an unsecured loan application.

However, the company must still demonstrate that repayments are affordable.

Additional security also creates consequences if the borrower defaults.

The legal rights attached to existing and proposed security should be reviewed carefully.

For further information, read our Business Funding Without Property Security UK guide.

3. Business overdrafts and revolving credit

A commercial overdraft or revolving credit facility can potentially help cover recurring short-term cash requirements.

For example, a wholesale business may need additional liquidity between purchasing stock and receiving customer payments.

A revolving facility can provide flexibility within an agreed credit limit.

However, applications remain subject to credit assessment.

Existing Bounce Back Loan repayments will normally be considered when evaluating affordability.

4. Invoice finance

Invoice finance may suit businesses with qualifying unpaid business-to-business invoices.

Instead of relying entirely on a conventional unsecured loan, the provider assesses eligible receivables and other relevant risks.

For example, a logistics company repaying a Bounce Back Loan may have £75,000 of invoices owed by established commercial customers.

Those invoices could potentially support an invoice finance facility, subject to debtor quality, verification, existing security and the provider's terms.

The presence of a Bounce Back Loan does not automatically make those invoices ineligible.

However, invoice finance providers will still evaluate the company's overall position and any contractual restrictions.

5. Equipment finance

Asset finance may be appropriate where a company needs commercial equipment, vehicles or machinery.

For example, a manufacturing company might seek financing for additional CNC machinery rather than applying for an unrestricted working capital loan.

The provider may assess the equipment, purchase price, deposit, business performance and repayment capacity.

An outstanding Bounce Back Loan remains relevant but may not be the determining factor.

6. Merchant cash advances

Some businesses with substantial card or online payment revenue may investigate merchant cash advances.

Certain MCA providers assess qualifying sales activity alongside existing borrowing obligations.

This may be relevant to restaurants, takeaways, retailers, convenience stores and eligible e-commerce businesses.

However, a merchant cash advance is not necessarily a conventional term loan.

It may involve the purchase of future receivables and an agreed financing charge.

An MCA should not be treated as an easy way to bypass concerns about existing business debt.

Frequent collections from card revenue can create additional pressure, particularly for businesses already experiencing repayment difficulties.

Read our Merchant Cash Advance Eligibility UK guide for more information.

Can You Refinance a Bounce Back Loan With Another Business Loan?

Yes, refinancing may be possible where the replacement lender permits it, the transaction is properly structured and the business qualifies.

Refinancing involves using new financing to repay some or all of an existing debt obligation.

The British Business Bank confirms that Bounce Back Loans can be repaid early without early repayment charges.

Its Growth Guarantee Scheme lender guidance also expressly permits qualifying GGS facilities to support refinancing or consolidation of certain existing financing, including BBLS debt.

However, the lender must approve the transaction, and applicable scheme conditions must be satisfied.

Is refinancing a Bounce Back Loan financially sensible?

Not always.

Bounce Back Loans carry a fixed interest rate of 2.5% per annum.

A replacement commercial loan may carry a substantially higher rate and additional fees.

For example, suppose a business has £20,000 outstanding on its Bounce Back Loan.

It is offered a replacement facility charging a hypothetical 16% annual nominal interest rate.

Replacing the remaining 2.5% borrowing with 16% borrowing could significantly increase the interest cost.

However, the total comparison also depends on the repayment period, new arrangement fees, amount of additional funding and remaining BBLS schedule.

A longer repayment term might reduce the immediate monthly obligation while increasing the total amount repayable.

When might refinancing make sense?

It may be worth investigating where:

The business needs to restructure several obligations into an affordable schedule.
Additional working capital is required for a clearly defined commercial purpose.
The current repayment profile creates a temporary timing problem.
The replacement structure materially improves the overall financing position.
All costs, guarantees and contractual risks have been assessed.

A business should not refinance solely because another lender offers a larger headline loan amount.

Does the Bounce Back Loan transfer to the new lender?

No.

The British Business Bank explains that an existing BBLS facility is not transferable to a different lending provider.

The original loan must be retained with its lender or repaid according to the applicable terms.

A separate refinancing transaction is not the same as transferring the existing government-backed agreement.

Source: British Business Bank — Growth Guarantee Scheme Lender Guidance.

Do You Need to Repay Your Bounce Back Loan Before Applying for Another Loan?

No, not as a universal requirement.

Some lenders consider applications from businesses with existing debt, including BBLS borrowing.

Others may limit total borrowing or require certain existing obligations to be reduced or repaid.

The appropriate question is whether the prospective lender is willing to assess the company with its current Bounce Back Loan still outstanding.

Should you pay off the Bounce Back Loan early to improve eligibility?

Not automatically.

Repaying the outstanding balance reduces the company's liabilities and future repayments.

However, it also requires using cash that may be needed for normal business operations.

A business should avoid exhausting its working capital simply to appear debt-free during a new application.

The lender may consider remaining cash reserves and operating liquidity, not just the outstanding debt balance.

Early repayment makes sense when it genuinely improves the company's financial position.

Does a Bounce Back Loan Affect Your Business Credit Score?

The effect depends on the company's payment history, the credit information available and how lenders assess it.

Having an outstanding Bounce Back Loan does not automatically mean a business has poor credit.

However, missed repayments, defaults and wider financial difficulties can have adverse consequences.

It is also important to distinguish between a credit score and a lender's individual risk assessment.

A company may have maintained its credit rating while still having too much existing debt to qualify for another facility.

What about Pay As You Grow?

The British Business Bank states that using PAYG does not itself affect a borrower's credit rating.

However, the arrangement may influence future creditworthiness assessments.

That is because lenders consider the borrower's current and expected financial commitments.

Will a new lender see the Bounce Back Loan?

A lender may identify the obligation through credit information, business bank statements, accounting records, loan statements or information supplied in the application.

The borrower should disclose the outstanding facility accurately.

Do not assume a loan can be ignored because it was originally government-backed.

Do Directors Need to Personally Guarantee a New Loan if They Already Have a Bounce Back Loan?

Potentially.

The original Bounce Back Loan Scheme did not permit lenders to require personal guarantees for BBLS facilities.

However, those rules do not automatically apply to new commercial borrowing.

A prospective lender may require a director or shareholder to provide a personal guarantee.

That means a director could become personally responsible for specified obligations if the company fails to repay the new loan.

Does a new personal guarantee cover the existing Bounce Back Loan?

Not automatically.

The extent of a guarantee depends on the signed agreement.

Some guarantees relate to a specific facility.

Others may contain broader wording.

Business owners should review the legal documentation and obtain independent advice where necessary.

Does limited company status protect directors?

A limited company is generally a separate legal entity.

Directors are not normally personally responsible for ordinary company borrowing simply because they manage the business.

However, personal guarantees and certain forms of misconduct can create separate personal liability.

The Insolvency Service explains that wrongful trading, fraudulent trading and other misconduct can result in personal consequences.

Source: GOV.UK — Director Duties Upon Insolvency.

Can a Sole Trader Get Another Loan While Repaying a Bounce Back Loan?

Potentially.

Sole traders were among the businesses that could qualify for the original Bounce Back Loan Scheme.

However, a sole trader does not have the same legal separation between personal and business liabilities as a limited company.

A new lender may therefore examine both business trading information and the individual's financial circumstances.

It may consider:

Business income.
Existing Bounce Back Loan repayments.
Personal financial obligations.
Credit history.
Available repayment cash flow.
The purpose of the proposed finance.

The original BBLS rules did not permit personal guarantees and included protections concerning recovery against a sole trader's principal private residence and primary personal vehicle.

However, those particular protections should not be assumed to apply to unrelated new borrowing.

The legal position depends on the new agreement.

What Documents Will a Lender Need if You Have an Existing Bounce Back Loan?

Documentation requirements differ between providers.

However, having accurate information available can reduce avoidable delays.

Bounce Back Loan information

Prepare:

Original borrowing amount.
Current outstanding balance.
Existing lender's name.
Normal monthly repayment.
Remaining loan term.
Current payment status.
Details of any PAYG arrangement.
Current loan statement, where available.

Business financial information

Depending on the application, the provider may request:

Recent business bank statements.
Latest filed annual accounts.
Current management accounts.
Profit and loss information.
Cash flow forecasts.
VAT information where relevant.
Details of other loans and overdrafts.
Company registration and ownership records.

Evidence of the proposed financing purpose

For example, a business purchasing machinery may need a supplier quotation.

A wholesaler buying stock may provide purchase orders and a cash flow forecast.

A company seeking invoice finance may need an aged debtor report and supporting invoices.

The documentation should establish what the money will fund and how the business expects to repay it.

How to Improve Your Chances of Getting a Business Loan With an Outstanding BBLS Balance

The objective is not to hide the existing loan.

It is to demonstrate that further borrowing is appropriate and supportable.

Step 1: Establish the current Bounce Back Loan balance

Obtain an accurate statement from the original lender.

Record the remaining amount, regular repayments and maturity date.

Step 2: Review all other existing debts

Prepare a complete schedule covering loans, overdrafts, asset finance, merchant cash advances and relevant payment arrangements.

A new lender may consider your entire financing exposure.

Step 3: Calculate cash available for new repayments

Start with realistic operating cash flow.

Allow for essential expenses, existing borrowing, taxes and other commitments.

Do not base the calculation solely on turnover.

Step 4: Examine weaker trading periods

Review whether your company can still afford repayments if revenue decreases or customer payments are delayed.

This is particularly important for seasonal businesses.

Step 5: Identify the actual funding requirement

Request the amount genuinely needed for the business purpose.

Avoid seeking the maximum advertised amount without establishing a corresponding commercial requirement.

Step 6: Select a suitable financing structure

A term loan may support a one-off investment.

Invoice finance may be appropriate for qualifying unpaid customer invoices.

Equipment finance may better suit a machinery purchase.

A revolving facility may help manage recurring cash flow timing differences.

Step 7: Disclose the Bounce Back Loan accurately

Provide the correct balance, repayments and PAYG information.

A lender may verify these details through financial documents and other authorised checks.

Step 8: Compare the complete financing cost

Review interest, fees, repayment frequency, total amount payable, security, personal guarantees and early settlement conditions.

A lender's willingness to approve further borrowing does not establish that accepting the offer is financially beneficial.

Examples of Businesses Seeking Additional Finance While Repaying BBLS

The following scenarios are hypothetical illustrations, not actual funded transactions.

Example 1: Restaurant with strong card sales

A restaurant in Manchester is repaying an outstanding Bounce Back Loan.

It generates consistent card revenue but needs £18,000 for a kitchen refurbishment.

Its lender may consider conventional business finance or an appropriate asset finance structure.

The business might also explore sales-linked financing where eligible.

However, existing repayments and the restaurant's operating margins remain important.

A merchant cash advance with substantial deductions could be unsuitable if the restaurant has limited cash remaining after expenses.

Example 2: Manufacturer purchasing additional equipment

A manufacturing company in Birmingham has £22,000 outstanding on its Bounce Back Loan.

It has returned to stronger trading and needs £75,000 for new equipment.

An asset finance provider might assess the equipment, company financial statements and current borrowing obligations.

The existing Bounce Back Loan does not automatically prevent the equipment application.

However, a lender must still determine whether the company can manage the additional repayment.

Example 3: Logistics company waiting for invoices

A logistics business in Leeds has a Bounce Back Loan alongside £90,000 of outstanding invoices owed by commercial customers.

It requires short-term working capital to cover operating expenses.

Invoice finance may be worth investigating if the invoices and debtors satisfy the provider's requirements.

This could be more closely aligned with the business's cash conversion cycle than obtaining an unrestricted additional term loan.

Example 4: Retailer struggling with repayments

A retailer in London has £15,000 outstanding on its Bounce Back Loan.

It has experienced declining turnover and has repeatedly missed supplier and financing payments.

The company seeks an additional £30,000 to cover normal operating expenses.

Further borrowing may not be suitable without a credible plan to restore sustainable cash flow.

The company should assess its financial position and discuss repayment difficulties with its existing creditors before adding new debt.

What if Your Bounce Back Loan Is Close to Maturity?

This is increasingly relevant in 2026.

The earliest Bounce Back Loans were issued in 2020 with original six-year terms.

Therefore, some borrowers may have reached their original maturity dates during 2026.

Other borrowers may have later maturity dates or extended repayment arrangements under Pay As You Grow.

A lender considering new finance may need to know whether the existing Bounce Back Loan will be fully repaid shortly or whether substantial repayments remain due.

Should you wait until the Bounce Back Loan is cleared?

It depends on the company's circumstances.

Waiting may reduce outstanding debt and improve future repayment capacity.

However, the business may have a legitimate financing requirement before the existing loan matures.

A lender can assess both obligations together.

There is no universal requirement to wait.

Can You Use a New Business Loan to Pay Off Your Bounce Back Loan?

Potentially, subject to the new lender's permitted use of funds and the financing agreement.

The original BBLS rules allow early repayment without an early repayment charge.

However, borrowing at a significantly higher rate simply to repay a 2.5% Bounce Back Loan can be expensive.

Example: Replacing a low-interest Bounce Back Loan

Suppose a company has £15,000 outstanding on BBLS.

Its new lender offers a £25,000 facility.

The proposal would use £15,000 to settle BBLS and leave £10,000 in additional funds before any fees or deductions.

The company needs to assess:

The exact BBLS settlement amount.
Net additional cash actually received.
The new interest rate.
The new repayment period.
Arrangement fees.
Total contractual repayments.
Any personal guarantee or security.
Whether the new repayments remain affordable.

The apparent £25,000 approval does not mean the business receives £25,000 of additional usable working capital.

The existing settlement obligation must be deducted.

For more information about alternative commercial financing structures, see our Business Cash Advance UK guide.

When Should You Avoid Borrowing More While Repaying BBLS?

Additional borrowing may be inappropriate when the business already struggles to meet its existing obligations.

Warning signs include:

Regularly missed Bounce Back Loan repayments.
Continued operating losses without a credible recovery plan.
Persistent overdue supplier balances.
Unmanageable HMRC liabilities.
Repeated returned Direct Debits.
Dependence on new finance to make old loan payments.
Insufficient cash for normal business expenses.
No realistic source of repayment for the proposed facility.

A company cannot solve an ongoing operating deficit simply by repeatedly adding debt.

What if the company may be insolvent?

A company may be insolvent if it cannot pay debts when due or if its liabilities exceed its assets.

Directors of insolvent companies have legal duties that require particular attention to creditors' interests.

Where insolvency is a concern, professional advice should take priority over applying for another loan.

The UK government provides guidance on these responsibilities through the Insolvency Service.

Where can businesses obtain free debt advice?

Business Debtline provides free, independent debt advice to businesses and self-employed people in Great Britain.

Telephone: 0800 197 6026.

The British Business Bank also provides information on free business debt advice.

Does the Government Investigate Businesses With Outstanding Bounce Back Loans?

An outstanding Bounce Back Loan does not, by itself, establish misconduct.

Businesses that obtained loans legitimately and continue meeting their obligations should distinguish ordinary debt repayment from cases involving fraud or misuse.

However, the government and Insolvency Service can investigate suspected misconduct involving the original scheme.

Examples include:

Providing false information when applying.
Inflating turnover to obtain more funding.
Using BBLS money for personal purposes unrelated to the business.
Obtaining multiple Bounce Back Loans contrary to the scheme rules.
Attempting to dissolve a company improperly to avoid liabilities.

In November 2025, the government published guidance on a Voluntary Repayment Scheme for certain Bounce Back Loan circumstances.

That particular voluntary programme closed on 31 December 2025, although borrowers can still contact their original lenders about outstanding repayments.

The existence of government enforcement activity does not mean a legitimate borrower is prohibited from seeking further finance.

Source: GOV.UK — Bounce Back Loan Voluntary Repayment Guidance.

Frequently Asked Questions: Business Loans With Outstanding Bounce Back Loans UK

Can I get another business loan if I am still paying my Bounce Back Loan?

Yes, potentially. An outstanding Bounce Back Loan does not automatically prevent additional commercial borrowing. Approval depends on the lender's requirements, existing financial commitments and repayment capacity.

Do I need to pay off my Bounce Back Loan before getting another loan?

Not universally. Some lenders accept applicants with outstanding business debt. Others may impose restrictions or require specific obligations to be reduced.

Can I apply for another loan from the same bank that provided my Bounce Back Loan?

Potentially. The bank may offer other commercial finance products, subject to its lending criteria. It is not required to approve additional borrowing because the business previously received BBLS funding.

Can I get a second Bounce Back Loan in 2026?

No. The Bounce Back Loan Scheme closed to new applications and top-ups on 31 March 2021.

Can I get a £50,000 business loan with an outstanding Bounce Back Loan?

Potentially. The lender will assess whether the company can support the proposed amount and repayments. There is no universal £50,000 entitlement or automatic exclusion.

Does having a Bounce Back Loan affect the Growth Guarantee Scheme?

It can affect the amount and affordability assessment, but it does not automatically make a business ineligible. The British Business Bank specifically allows qualifying businesses with historic BBLS borrowing to be considered for GGS facilities.

Can I apply for GGS while using Pay As You Grow?

Yes, subject to scheme eligibility and lender underwriting. PAYG does not automatically prevent an application, although existing and future repayments remain relevant.

Does Pay As You Grow damage my credit score?

The British Business Bank states that using PAYG does not itself affect a borrower's credit rating. However, it may influence future creditworthiness assessments.

Can I get a business loan while on a Bounce Back Loan repayment holiday?

Potentially. A lender may consider the application, but it will also assess why the holiday was needed and whether the company can afford repayments when the holiday ends.

Can I get additional borrowing with BBLS arrears?

Possibly, but unresolved arrears can significantly limit options. The business should first assess its financial condition and contact its existing lender about available repayment assistance.

Can I refinance my Bounce Back Loan?

Potentially. BBLS permits early repayment without a penalty. Certain commercial refinancing structures, including eligible GGS facilities, may be used to refinance BBLS borrowing, subject to the lender's approval and relevant conditions.

Is refinancing a Bounce Back Loan cheaper?

Not necessarily. The original BBLS interest rate is fixed at 2.5%. A replacement facility may charge substantially more, even if monthly repayments are reduced by extending the term.

Can I transfer my Bounce Back Loan to another bank?

No. The existing BBLS facility must ordinarily remain with the original lender or be repaid. A separate refinancing transaction does not transfer the original government-backed loan agreement.

Does the Bounce Back Loan have a personal guarantee?

The original BBLS scheme prohibited lenders from requiring personal guarantees. However, the borrowing business remains liable, and different legal obligations may apply to sole traders, partnerships or misconduct cases.

Will a new loan require a personal guarantee?

It might. Personal guarantee requirements depend on the new lender and the individual agreement. The original BBLS guarantee restrictions do not automatically apply.

Can I get an unsecured business loan while repaying BBLS?

Potentially. A lender may consider an unsecured financing request, but it will assess the existing Bounce Back Loan and other debts before making a decision.

Can I get equipment finance with an outstanding Bounce Back Loan?

Yes, potentially. Asset finance providers may consider the equipment, business financial position and ability to afford repayments alongside existing obligations.

Can I get invoice finance while repaying a Bounce Back Loan?

Potentially. Invoice finance providers assess qualifying receivables, customer quality, financial records and other obligations. Existing BBLS borrowing does not automatically exclude invoice finance.

Can I get a merchant cash advance while repaying BBLS?

Some providers may consider businesses with existing borrowing, subject to their criteria. However, substantial card-sales collections combined with existing debt repayments can create cash flow pressure.

Can I borrow more if my business turnover has increased since 2020?

Potentially. Improved turnover may support an application, but lenders also consider expenses, cash flow, profitability and existing debt.

Can I get a loan if my latest accounts show a loss?

Possibly. Lenders may examine the reason for the historic loss and whether recent trading supports repayments. Persistent negative cash flow can make further borrowing unsuitable.

Does the government repay my Bounce Back Loan if my company fails?

The government guarantee protects the participating lender under the scheme's terms. It does not automatically remove the borrower's repayment obligations or eliminate possible consequences of misconduct.

Will paying off my Bounce Back Loan improve my chances of borrowing?

It may reduce the company's total debt and monthly commitments. However, using cash to repay existing debt can also reduce working capital. Approval still depends on the company's full financial position.

What if my bank declines me because I have a Bounce Back Loan?

Ask whether the decision relates to the outstanding balance, repayment history, affordability, credit profile or another lending criterion. Other lenders may have different policies, but the underlying financial issues remain relevant.

Should I apply for a business loan to cover Bounce Back Loan repayments?

Borrowing solely to cover existing repayments can create additional financial risk. The business should first establish whether its underlying cash flow is sustainable and whether an agreed repayment adjustment or independent debt advice is more appropriate.

Final Verdict: Can You Get a Business Loan While Repaying a Bounce Back Loan?

Yes. UK businesses can potentially obtain new commercial financing while repaying an outstanding Bounce Back Loan.

The original scheme does not create a general prohibition on future borrowing.

The British Business Bank also confirms that qualifying businesses with BBLS debt, including some borrowers using Pay As You Grow, can be considered for Growth Guarantee Scheme finance.

However, a new lender must still establish that the company can support its financial obligations.

The main considerations are:

Existing debt: How much does the business still owe?
Repayment history: Has the company managed its current commitments?
Available cash flow: Can it realistically afford another payment?
Purpose: What commercial activity will the additional finance support?
Financing structure: Would a loan, invoice facility, asset finance arrangement or another product better match the requirement?

A company with strong recent trading and manageable existing repayments may still have financing options.

A company struggling with persistent losses and missed commitments may need repayment support or professional advice rather than additional debt.

The most appropriate decision depends on the business's current financial position, not simply whether a Bounce Back Loan remains outstanding.

Explore UK Business Financing Options With Mehmi Financial Group

If your business is still repaying a Bounce Back Loan and needs additional commercial finance, understanding the outstanding obligation is an important starting point.

Mehmi Financial Group is an independent commercial financing brokerage, not a direct lender. We receive enquiries from eligible businesses in the United Kingdom and can assess whether a suitable financing introduction or referral route may be available through independent third parties, subject to applicable local requirements.

Depending on the business and available provider arrangements, enquiries may concern working capital, business loans, asset finance, receivables financing or other commercial funding requirements.

To begin a financing discussion, prepare:

Company name and UK location.
Industry and trading history.
Approximate monthly turnover.
Current outstanding Bounce Back Loan balance.
Monthly BBLS repayment amount.
Any Pay As You Grow arrangement.
Existing additional business debt.
New financing amount required.
Intended use of funds.
Preferred financing timeframe.

Discuss Your UK Business Financing Requirements

Start with a general description of your requirements and request the appropriate secure submission route before sending detailed financial, customer or identity documents.

Mehmi Financial Group cannot approve, modify or suspend an existing Bounce Back Loan. It does not guarantee financing approval, interest rates, amounts or funding dates. Products, where available, are provided by independent third parties and are subject to underwriting, verification and final contractual terms. Mehmi Financial Group may receive commissions or referral fees.

Sources and Editorial Methodology

This article uses official UK government and British Business Bank guidance, with a focus on programme eligibility, repayment obligations, affordability and refinancing.

Primary sources reviewed:

All borrowing examples are hypothetical. They illustrate credit assessment principles and do not represent actual customer transactions, financing offers or guaranteed outcomes.

Government scheme rules and provider criteria may change. Businesses should verify the latest terms before making an application or refinancing decision.

About the Author

Jodhbir Mehmi is a commercial finance specialist at Mehmi Financial Group, working with business owners on financing requirements, credit documentation and commercial funding options.

Editorial disclosure: This article provides general information about UK business financing and does not constitute personalised financial, legal, tax or insolvency advice. Businesses experiencing serious financial difficulties should obtain appropriate independent professional advice before assuming further debt.

The article's key eligibility and refinancing statements are directly supported by the British Business Bank's BBLS and GGS guidance, including its confirmation that Pay As You Grow does not automatically prevent further borrowing.

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