Businesses that took out Bounce Back Loans to survive the coronavirus pandemic will now have more options to repay their loans, the government has announced.
Bounce Back Loan borrowers will now have the choice to a repayment plan to suit their circumstances with the option to postpone 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 £45bn through the Bounce Back Loan Scheme.
The Treasury’s Pay as You Grow repayment flexibility allows borrowers to choose their repayment schedule, with the option to:
- Extend the length of their loans from six to 10 years (reducing monthly repayments by almost half)
- Make interest-only payments for six months
- Pause repayments for up to six months.
The Chancellor has now extended the flexibility of the third option, which will now be available to all from the first repayment, rather than after six repayments have been made. This change means businesses can choose to make no payments on their loans until 18 months after they took them out.
These Pay as You Grow (PAYG) options will be available to more than 1.4 million businesses that have taken out a total of nearly £45bn through the Bounce Back Loan Scheme. Businesses first received the loans in May 2020, with the first repayments due in May 2021.
This is in addition to the fact that the government covers the interest costs for the first year of the loan.
The extra support for Pay as You Grow, first announced by the Chancellor in September, allows borrowers to adjust repayments to their individual circumstances.
This will provide more time and flexibility to repay the loans.
The government has confirmed that lenders will contact borrowers to provide information on repayment plans and how to take advantage of the flexible repayment options.
Chancellor Rishi Sunak said:
“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.
“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.”
Contact J Sweeney Accountants on 01604 950034, email info@jsweeneyaccountants.co.uk or visit their website.
