UK Insolvency and Bounce Back Loans in 2025: Who Pays

When you see a fresh Insolvency Service “crackdown” headline, it helps to look at the numbers behind it. On 14 April 2025 the agency reported 1,036 director disqualifications in 2024/25, with 736 linked to Covid loan abuse and an average ban of around eight years. Those are real outcomes, but they’re only one part of the picture.

So where did the failed businesses go? Government data published on 30 May 2025 shows 114,752 Bounce Back Loan facilities tied to companies that, by 31 March 2025, had either dissolved or entered insolvent liquidation. In other words, these firms didn’t simply vanish; they were absorbed into the insolvency system.

Quick refresher: the Bounce Back Loan Scheme launched on 4 May 2020 to get cash to small firms fast. It issued about 1.5 million loans worth roughly £47 billion, came with a 100% state guarantee to lenders, and required minimal checks. Borrowers remain liable for repayment, but if they fail to pay, the government steps in to reimburse the lender. This design stabilised lending quickly, but it also raised obvious fraud and loss risks.

How are those loans performing now? Official repayment data shows that by 31 December 2024, businesses had drawn £46.52 billion under BBLS. Nearly seven in ten facilities were either repaid or on schedule, while lenders had flagged about £1.88 billion as suspected fraud and the government had settled guarantee claims on roughly a quarter of facilities by volume. It’s a mixed picture: many loans are fine, but a material share has moved to taxpayer-backed claims.

You may also have seen stories about a specialist fraud unit. The National Investigation Service (NATIS), created to pursue Bounce Back Loan abuses, recovered about £7.2 million out of an estimated £1.9 billion in suspected fraud before it was dissolved in May 2025, with cases transferred to the Insolvency Service. Headlines about tough action don’t always match the recovery figures.

The Insolvency Service says that is changing. Its five‑year Investigation and Enforcement Strategy (2026–2031), published on 16 July 2025, commits to more prosecutions, wider corporate enforcement and heavier use of data and AI. What this means: when future “crackdowns” are announced, we should look for two sets of results - not just director bans, but also money recovered and harmful behaviour stopped.

Now to the bit that’s often misunderstood: who pays the professionals. Insolvency practitioners’ fees are drawn from the company’s remaining assets (the “estate”) and must be approved by creditors or the court under rules and guidance such as Statement of Insolvency Practice 9. That means creditors - including banks and HMRC - have a say over what’s paid out.

Separately, the 100% guarantee is between government and the lender. If a BBLS borrower defaults, the lender can claim on that guarantee - but not every claim stands. By 30 June 2025, guarantees had been removed from 13,694 BBLS loans (for example, after data corrections or discussions with the lender), showing how post‑event checks can unwind parts of the bill.

Enforcement examples are still landing. On 22 October 2025, two sisters received seven‑year director bans for enabling an “insolvency avoidance” scheme tied to 138 companies, with creditors exposed to more than £67 million. Cases like this show why enforcement remains necessary, even as we interrogate the wider system.

So who loses out when things go wrong? For some small owners, repayments have been hard in a weak trading environment; staff, suppliers and the public purse can all suffer when a firm collapses. It’s a reminder that the line between deliberate abuse and simple inability to repay matters - for fairness and for how we judge outcomes.

Media literacy tip for your next read: when you come across a press release about director bans, ask yourself how much money was actually recovered; how many cases were deliberate fraud versus business failure; what happened to the assets; and who approved the professional fees. These questions turn a headline into a learning moment about accountability.

What to watch next: year‑to‑date figures for 2025/26 show the Insolvency Service continuing to secure director bans, and it now holds the dissolved NATIS caseload. We’ll keep tracking two measures - conduct sanctions and cash brought back - because both matter if the aim is to protect honest businesses and taxpayers.