Businesses that took out government-backed Bounce Back Loans to get through Covid-19 will now have greater flexibility to repay their loans.
Bounce Back Loan borrowers will now have the option to tailor payments according to their individual circumstances with the option to delay all repayments for a further six months.
Pay as You Grow will be available to over 1.4 million businesses, which collectively took out nearly £45 billion through the Bounce Back Loan Scheme.
The Chancellor’s Pay as You Grow repayment allows businesses to make no payments on their loans until 18 months after they originally took them out.
The option to pause repayments will now be available to all from their first repayment, rather than after six repayments have been made.
Pay as You Grow will also enable borrowers to extend the length of their loans from six to 10 years (reducing monthly repayments by almost half) and make interest-only payments for six months, in order to tailor their repayment schedule to suit their individual circumstances.
This is in addition to the government covering the costs of interest for the first year of the loan.
Pay as You Grow’s additional support, first announced by the Chancellor in September, will give borrowers the option to tailor repayments to their individual circumstances.
This will provide more time and greater flexibility to repay the loans.
Lenders will begin contacting borrowers to provide information on repayment schedules and how to access flexible repayment options.
It will provide businesses with the following options:
- Extend the length of the loan from six years to ten
- Make interest-only payments for six months, with the option to use this up to three times throughout the loan
- Pause repayments entirely for up to six months
“Businesses are continuing to feel the impact of extended disruption from Covid-19, and we’re determined to give them the backing and confidence they need to get through the pandemic,” said The Chancellor of the Exchequer, Rishi Sunak.
“That’s why we’re giving Bounce Back Loan borrowers breathing space to get back on their feet, through greater flexibility and time to repay their loans on their terms.
“Lenders will proactively and directly inform their customers of Pay as You Grow, and borrowers should only expect correspondence three months before their first repayments are due,” he added.
Ellis & Co Chartered Accountants and Business Advisers, Chester & Wrexham - 01244 343504, firstname.lastname@example.org