Can’t Repay a CBILS Loan? Options and Advice for UK Company Directors

Reviewed by

Chris Andersen

Reviewed by Chris Andersen

Chris became an Insolvency Practitioner in 2014 and is currently regulated by the IPA.

He is experienced in contentious insolvency with excellent analytical skills and strong knowledge of both general and technical insolvency matters.

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15th July 2026

If your company received a CBILS loan and cannot repay it, the lender will pursue the debt through the same enforcement routes as any other commercial loan. The government’s 80% guarantee protects the lender, not you. If you signed a personal guarantee for the facility, you face personal liability for the shortfall.

We work with directors who took out CBILS facilities during the pandemic and are now struggling to repay. The business survived COVID but not the repayment schedule.

The loan that kept the company alive in 2020 is now the debt that threatens to close it in 2026. We explain below what happens if you default on a CBILS loan, what the lender can do, and what options are available before enforcement starts.

Quick Answer on What Happens If You Cannot Pay CBILS

If you miss CBILS repayments, the lender follows the same enforcement path as any other commercial loan: demand letters, default notice, recall of the facility, and enforcement against the company’s assets and any personal guarantees.

The government guarantee means the lender recovers 80% of any loss from the government, but they will pursue you for the remaining 20% (or more, depending on your guarantee terms) before claiming the government guarantee.

We tell directors: do not assume the government guarantee protects you. It protects the bank. Your protection depends on whether you signed a personal guarantee, what the guarantee covers, and whether the company has assets the lender can realise. See our guide on CBILS personal liability for the full breakdown.

Options Before You Default on CBILS

We advise acting before the first missed payment. The options narrow dramatically after default.

• Negotiate with the lender directly. Banks have restructuring teams. Contact your relationship manager and explain the position. Lenders prefer restructured repayments to default because the government guarantee only covers losses, not the hassle of enforcement. We find lenders who are engaged early will extend terms, reduce payments, or agree interest-only periods.
• Refinance the CBILS facility. Replace the CBILS loan with a new facility on better terms: longer duration, lower payments. This is viable if the business is fundamentally profitable but the repayment schedule is too aggressive.
• Use HMRC Time to Pay for tax debts to free up cash for loan repayments. If HMRC debt is consuming the cash that should cover the CBILS repayment, a TTP arrangement can reallocate cash flow.
• Consider a CVA if the CBILS debt is part of a wider creditor problem. A CVA can restructure all debts, including the CBILS facility, into a single binding repayment plan.
• If the business is not viable, consider a CVL. Closing the company through voluntary liquidation is better than waiting for the lender to enforce. It demonstrates responsible conduct and gives you control of the process.

What Happens After CBILS Default

If you miss payments and do not engage with the lender:

Stage 1: Default notice. The lender issues a formal default notice requiring payment within a specified period (typically 14 to 30 days).

Stage 2: Facility recall. The lender recalls the full outstanding balance. The entire loan becomes due immediately, not just the missed instalments.

Stage 3: Enforcement against the company. If the lender holds a debenture (fixed and floating charges), they can appoint a receiver, enforce the charges, and realise company assets. If they hold a qualifying floating charge, they can appoint an administrator.

Stage 4: Personal guarantee call. If you signed a guarantee, the lender pursues you for the shortfall. The government guarantee covers 80% of the lender’s loss, but the lender must exhaust other recovery routes (company assets and personal guarantees) before claiming the government guarantee. You are pursued before the government pays.

We stress this sequence because directors assume the government pays first. It does not. The lender pursues you first, recovers what it can from the company and your guarantee, and then claims the government guarantee for the remaining loss. Your personal exposure is real and comes before the government backstop.

Can You Negotiate a CBILS Debt Down?

Yes. We have seen CBILS facilities restructured, reduced, and settled at below face value when the director engaged early and made a credible proposal. The lender’s calculation is: will we recover more from negotiation or from enforcement? If enforcement costs more and recovers less, the lender will negotiate.

We advise: contact the lender before you miss a payment. Propose a revised repayment schedule with evidence that the business can sustain it. If the business cannot sustain any repayment, be honest about that and discuss the company’s options with a licensed insolvency practitioner before the lender forces the issue.

What You Should Do Right Now About CBILS

1. Check your CBILS facility agreement. What did you guarantee? Is the guarantee secured against your property? See our CBILS liability guide.
2. Contact the lender before you miss a payment. Restructuring is easier before default than after.
3. If the business is viable but cash-strapped, explore refinancing or a CVA.
4. If the business is not viable, speak to a licensed insolvency practitioner. A CVL is better than waiting for the lender to enforce.

Company Debt connects directors with licensed insolvency practitioners who handle CBILS-related cases. A free, confidential consultation will clarify your options.

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