Can’t Repay a CBILS Loan? Options and Advice for UK Company Directors
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, which the scheme allowed only on facilities over £250,000, the lender can call on it. The scheme capped what it can recover at 20% of the balance left after the company’s assets have been applied.
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 covers 80% of the lender’s loss. If you gave a personal guarantee on a CBILS facility over £250,000, the lender can call on it, but the scheme capped what it can recover at 20% of the outstanding balance after the company’s assets have been applied.
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.
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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. Lenders who are engaged early may agree to 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 your unsecured debts, including an unsecured CBILS facility, into a single binding repayment plan. If the CBILS lender holds security, the CVA cannot stop it enforcing that security unless it agrees.
- 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 over the assets covered by a fixed charge, such as property, and sell them. If they hold a qualifying floating charge, they can appoint an administrator.
Stage 4: Personal guarantee call. If you signed a guarantee, the lender can call on it, up to the scheme cap. The government guarantee covers 80% of the lender’s loss, and the lender can claim it while it still pursues the company and any guarantee. The government guarantee does not reduce what you owe.
We stress this because directors assume the government payment makes the debt go away. It does not. The government pays the bank, and the bank keeps recovering from the company and from your guarantee. Your personal exposure is real, whatever the government pays.
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
- Check your CBILS facility agreement. What did you guarantee? Is the guarantee secured against your property? See our CBILS liability guide.
- Contact the lender before you miss a payment. Restructuring is easier before default than after.
- If the business is viable but cash-strapped, explore refinancing or a CVA.
- 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’s licensed insolvency practitioners handle CBILS-related cases. A free, confidential consultation will clarify your options.
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FAQs on Cannot Pay CBILS
Does the government pay if I default on CBILS?
The government guarantees 80% of the lender’s loss, but that protects the lender, not you. The lender can claim on it and still pursue the company and any personal guarantee you gave.
Can the lender take my house for a CBILS default?
The CBILS scheme prohibited lenders from taking security over your principal private residence as part of a CBILS guarantee. If your guarantee includes a charge on your home, the lender may have breached the scheme terms.
Take legal advice. This may give you leverage with the lender, and possibly grounds for challenge, depending on the guarantee documents.
Can I negotiate a CBILS repayment plan?
Yes. Contact your lender’s restructuring team before you default. Lenders prefer restructured repayments to enforcement because enforcement is expensive. Propose a revised schedule with evidence the business can sustain it.
