Will the Bank Close My Account if I Cannot Pay My Bounce Back Loan or CBILS?

Basically it depends! If your company is unable to pay back the Bounce Back Loan, despite the generous payback terms of up to 10 years, then your business is likely to be insolvent.

The banks are only going to get the money back from the government if they can demonstrate that they have done everything in their power to recover the loans, such as legal threats. If that fails, then realistically, only a terminal insolvency event, i.e liquidation, can demostrate to the government that they have tried everything due to the powers of the liquidator/administrator to investigate where the money has gone and the conduct of the directors. This is why attempts to dissolve companies will not be successful.

As the bank is the issuer of the loan, and provide the banking services, they can do whatever they like with your account. We have seen letters sent to directors saying that they must repay their Bounce Back Loans in full in 14 days or they will close the account!  This is due to the bank deciding that the directors effectively lied on the application or were perhaps completely unrealistic about predicted turnover. See this page for the article about these letters.

Recently certain banks have now started to take action against some companies where Bounce Back Loans are not being repaid. The banks are pursuing actions through the court which have led to companies being compulsorily wound up via a court order.

This, at least initially, leads to the appointment of the Official Receiver as Liquidator, to oversee the winding up and to carry out a review of the affairs of the company and the conduct of its directors.

Generally though, the bank will try and keep a good relationship with their customer for the long term. However, the main piece of advice is this.

Our firm advice is this. DO NOT run down the bounce back loan cash until there is nothing left to pay creditors, wages or even the cost of liquidation.

This may expose you to personal risk. Even if the bounce back loan is not personally guaranteed there are many circumstances where you could be liable.