Voluntary Repayment Scheme for Covid-19 Business Loans: Our Guide
The government has introduced a so-called ‘Covid amnesty’ scheme for businesses to resolve unpaid business loans, in theory with ‘no questions asked’, before tougher sanctions come in.
However, described by the government as a ‘voluntary repayment scheme’, it’s not quite as straightforward or as much of an amnesty as has been reported.
It was introduced on 12 September 2025 with a tight 31 December 2025 deadline to repay the funds. You may well be reading this article after that date has already passed.
In this guide, we’ll explain the scheme and what to do if your business is struggling to pay back Covid loans, before or after this deadline.
Key takeaways
- The voluntary repayment scheme applies to Bounce Back Loans and CBILS taken during the pandemic.
- It has a 31 December 2025 deadline – after this, the government will have new, stronger investigatory powers.
- Any positioning of it as an ‘amnesty’ is misleading. The scheme does not provide immunity – if there are signs of significant wrongdoing, regulators retain the power to investigate and take action.
- Before or after this deadline, Hudson Weir provides expert financial advice if your company cannot repay Covid loans.
- Potential options include a Company Voluntary Arrangement (CVA) and a Creditors’ Voluntary Liquidation (CVL).
What is the Covid Voluntary Repayment Scheme?
HM Treasury launched the voluntary scheme inviting directors to repay Covid-19 pandemic era support loans. For those who are already in a repayment plan or recovery process and meeting the terms of these arrangements, no further action under this voluntary scheme is necessary.
The government describes it as a ‘no-questions-asked’ opportunity to pay back the money for businesses and individuals that did not need or had no entitlement to the funds.
For businesses, the voluntary repayment scheme covers:
- Bounce Back Loans (BBLS)
- Coronavirus Business Interruption Loan Scheme (CBILS)
After the window closure on 31 December 2025, the Insolvency Service, HMRC and lenders will investigate any suspected misuse of these Covid loans more aggressively.
Many directors are in a situation where they took the financial support during the pandemic, for the legitimate purpose of trying to protect their business, but are now struggling to make repayments.
However, there were many businesses or individuals taking and using the Covid loans in mistaken or fraudulent ways. There was an error and fraud rate of approximately 5.1%, or £5 billion, according to government research.
Is it an ‘amnesty’?
Any positioning of the scheme as an ‘amnesty’ is somewhat misleading. It’s not a legal write-off.
The government will recognise voluntary repayment as a sign of cooperation, helping businesses to lower their risk and demonstrate good faith.
However, it does not provide immunity. If there are signs of significant wrongdoing, regulators retain the power to investigate and take action.
After correspondence with the Insolvency Service, the Insolvency Practitioners Association guidance on the Covid repayment window is that: “Repayment under the voluntary repayment scheme does not guarantee any protection to directors from enforcement action.”
What will happen after 31 December 2025?
The deadline to engage with the scheme is 31 December 2025.
This doesn’t necessarily mean your loan must be paid off by then; it just means that you need to open discussions with your lender before that date.
Beyond the deadline, from 2026 onwards – the government will have new, stronger investigatory powers and additional personnel.
Beyond reputational damage, there could be personal liability risks for directors if the government is able to prove misconduct.
The government has also launched a new Covid-19 fraud report service where anyone can anonymously submit a claim about a company or individual fraudulently using the funds.
What if your business is struggling to repay a Covid loan?
In terms of repaying either a Bounce Back Loan or a Coronavirus Business Interruption Loan if you are behind on payments, or haven’t yet secured an extension…
It’s a case of ‘better late than never’ – ignoring the issue makes things worse. Lenders may escalate recovery, and directors risk personal financial exposure in some situations.
That remains the case if you’re reading this article after 31 December 2025.
If your business has struggled to pay off a Covid loan up until now, take a look at our previous guide What To Do If You Cannot Pay Off Your Bounce Back Loan.
Hudson Weir provides expert financial advice if your company cannot repay Covid loans.
How can an insolvency practitioner help?
If your business is insolvent and unable to repay, then you need a qualified, licensed insolvency practitioner – find out more about the BBLS and CBILS help we offer.
Two options include a Company Voluntary Arrangement (CVA) and a Creditors’ Voluntary Liquidation (CVL).
Company Voluntary Arrangement
- For a business that’s able to continue trading, a CVA – typically lasting up to five years – could improve cash flow and ease pressure.
- By making agreed contributions to the insolvency practitioner and accepting changes to the business model – designed to prevent future insolvency issues – a company may save itself.
- The company’s credit file will have a record of the CVA, as will Companies House.
Creditors’ Voluntary Liquidation
- Alternatively, if the debts are unpayable then a CVL may be the best option.
- This process aims to pay off as much of the debt as possible using company assets.
- This method can also alleviate some pressure. It’s a more proactive and structured way of approaching liquidation than waiting for a court to force it.
Initiating a formal insolvency process allows you to retain greater influence over how the situation is resolved.
Final thoughts
If your business is struggling to repay a Covid loan, we recommend that you seek the advice of a licensed insolvency practitioner.
Hudson Weir can provide expert advice if you can’t pay back Bounce Back Loan or CBIL debt.
We can help your business through a CVA or, if necessary, guide you through the liquidation process.
If you found this guide useful, take a look at some of our most popular recent articles including:
- Putting Personal Money Into A Limited Company: What You Should Know
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- If a Company Goes Into Administration, Do I Have to Pay Them?
For more guidance about debt solutions, please contact us for a no-obligation discussion.
