On February 08, 2021, the government announced that businesses who have taken out government-backed Bounce Back Loans will have greater flexibility to repay them, allowing them to delay repayments for a further six months.
Chancellor Rishi Sunak has expanded the Bounce Back Loan Scheme’s (BBLS) Pay As You Grow repayment plan:
Delayed repayments
Businesses will now have the option to delay all repayments for a further six months, meaning businesses can choose 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.
Extend loan term
Pay as You Grow will also allow borrowers to extend the length of BBLS loans from six to ten years, and reduce monthly repayments by almost 50%. To give more time to repay, the updated scheme allows businesses to make interest-only payments for six months, in a bid to tailor the scheme to suit their individual business needs.
Lenders are required “to show due consideration and appropriate forbearance”
According to GOV.UK, lenders will proactively and directly inform their customers of Pay as You Grow from this week, and borrowers should only expect correspondence three months before the first repayment is due.
All businesses will be offered 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
The deadline to apply for Bounce Back Loans was extended to 31 March 2021 and the Furlough scheme, extended to 30 April 2021.
If you have new business concerns following the latest updates, get in touch with us at
[email protected] or call us at 01707 247044.
