Post-COVID Business Support: Are We Still Learning the Right Lessons?
COVID LOANS SAVED BUSINESSES — BUT LEFT DIRECTORS WITH LASTING CHALLENGES
The COVID-19 pandemic shook the foundations of UK business. For SMEs in particular, survival often depended on emergency support — from furlough to government-backed loans. Those schemes undoubtedly saved jobs and kept many businesses afloat.
But now, several years on, directors across the UK are still dealing with the legacy of those loans, repayment schedules, and shifting market conditions. The question is: did we learn the right lessons about resilience and recovery?
THE LOANS THAT KEPT COMPANIES AFLOAT
At the height of the crisis, few measures were as significant as the Bounce Back Loan Scheme (BBLS) and the Coronavirus Business Interruption Loan Scheme (CBILS).
BBLS gave SMEs quick access to loans of up to £50,000, fully government guaranteed. For many, it was the difference between paying suppliers and missing payroll.
CBILS offered larger facilities of up to £5 million, though often with more checks, more paperwork, and in some cases, personal guarantees from directors.
These schemes were lifelines. They allowed directors to steady the ship during lockdowns and gave businesses breathing space when revenues disappeared overnight.
For some, like Adem Mehmet, a London fitness business owner, the support was essential:
“I got a £50k Bounce Back Loan during the pandemic to cover staff and operational costs. We reduced so many memberships as we had to go online and I just wanted to make sure I could cover rent and overheads over that period. We didn’t have as many customers and it supported us. The low interest rate really helped…”
Adem’s experience mirrors that of thousands of small businesses that relied on loans simply to keep going during months of uncertainty.
THE LEGACY CHALLENGE
Fast forward to 2025, and many SMEs are still grappling with the aftermath.
Repayments are biting: Even with “Pay As You Grow” options, some directors are struggling with cash flow as higher energy bills, inflation, and tighter consumer spending squeeze margins.
Personal guarantees create personal risk: CBILS borrowers in particular may now face personal exposure if their companies cannot meet obligations.
Business failures are testing the system: In insolvency cases, BBLS debt is treated as unsecured company borrowing, while CBILS claims (with guarantees) can follow directors personally.
Fraud and misuse have consequences: Where loans were taken without genuine need or used improperly, directors face investigation, potential disqualification, and liability.
For Adem, the long-term picture has been challenging:
“…but long term I didn’t really think about the consequences of having such a big loan to pay back — averaging at £500 a month for ten years. I wasn’t thinking of the business long term as you can’t close it due to the loan.”
His reflection underlines a common issue: loans solved the immediate crisis but tied businesses into commitments that continue to shape their future decisions.
HOW THE INSOLVENCY INDUSTRY IS DEALING WITH IT
For insolvency practitioners, COVID loan debt is now a familiar feature of many distressed businesses. Common situations include:
Liquidations with BBLS debt: Loans are written off as unsecured liabilities, unless misconduct is proven.
CBILS in administrations: Creditors pursue repayment through insolvency processes — with personal guarantees sometimes triggered.
Restructuring options: Some companies are entering Company Voluntary Arrangements, allowing them to spread loan repayments alongside other debts in a manageable way.
Investigations into misuse: Cases of over-borrowing or misrepresentation are now leading to director bans and enforcement action.
WHAT DIRECTORS CAN TAKE AWAY
If you are leading an SME, the post-COVID support era leaves some clear lessons:
Understand your liabilities — especially if you signed a personal guarantee. Don’t assume the company debt stops at the company.
Cash flow forecasting matters more than ever — short-term survival doesn’t guarantee long-term sustainability.
Early advice pays — directors who act quickly when pressure builds usually have more restructuring options available.
Transparency is essential — with creditors, employees, and advisers. Avoiding the conversation makes the situation worse.
Use support responsibly — loans and credit are tools for recovery, not permanent fixes.
Adem’s story illustrates how easy it was to focus on short-term survival without fully weighing the decade-long commitments attached. For today’s directors, the lesson is to balance immediate needs with long-term sustainability.
A NEW OPPORTUNITY TO REPAY EARLY
In 2025, many directors are being presented with a fresh opportunity to reduce or clear their COVID loan balances sooner than planned. For some, this can mean negotiating early repayment terms, taking advantage of improved cash flow, or even restructuring existing borrowing to ease long-term commitments.
This development could be significant for SMEs:
Reducing long-term pressure — paying down loans early helps free up cash that would otherwise be tied into decade-long repayment schedules.
Improving financial stability — clearing liabilities strengthens balance sheets and makes companies more resilient in an uncertain economy.
Restoring director flexibility — removing the burden of personal guarantees or long-term obligations allows leaders to make clearer strategic choices.
For directors still grappling with repayments, it’s a chance to revisit financial planning, seek professional advice, and weigh whether early repayment could support both the business and personal peace of mind.
CONCLUSION: RECOVERY IS STILL A LESSON IN PROGRESS
Government support helped thousands of SMEs survive the pandemic, but survival came with strings attached. Today, directors are managing the consequences — some are steadily repaying and rebuilding, while others face insolvency, with COVID loan obligations adding complexity to already difficult decisions.
The recent opportunity to repay or restructure COVID loans earlier than expected adds a new dimension: for some, it could mean easing long-term pressure and restoring financial stability; for others, it highlights the importance of careful planning and timely advice.
If your company is under pressure from cash flow challenges, loan repayments, or wider financial strain, remember that confidential support is available. You can speak directly with our team on 020 7769 6831, reach us by email at help@voscap.co.uk, or find practical guidance at voscap.co.uk.
ABOUT VOSCAP
Voscap’s primary objective is to save your business. Our team of experts’ knowledge in restructuring and turnaround assignments is invaluable when assessing the best option available to your needs. With experience spanning several decades, we have the skill and resources to provide viable solutions within all industry sectors. All organisations go through difficult times and we are here to help. From small to multi-million turnover businesses, we have dealt with the most complex of cases. We offer an initial free assessment in analysing your financial position and providing clear and precise advice making your experience a simple non-complicated process.