Businesses that took out Government-backed Bounce Back Loans to get through covid-19 will now have greater flexibility to repay their loans.
Pay as You Grow will be available to more than 1.4 million businesses, which collectively took out nearly £45bn through the Bounce Back Loan Scheme, it was announced this week.
The Chancellor of the Exchequer’s repayment flexibilities now include 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. And 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 nearly 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.
The 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.”
Lenders will proactively and directly inform their customers of Pay as You Grow, and borrowers should expect correspondence only three months before their first repayments are due.
Business Secretary Kwasi Kwarteng added: “The comprehensive and generous financial support package we have delivered across the UK has protected jobs, saved businesses and kept local economies on the move.
“While our vaccine rollout is moving at an incredible pace and the end is in sight, we know times are still tough for many companies and extra support is needed.
“These flexible repayment options will give businesses the time they need to recover from the pandemic before paying back loans, giving them the breathing space and confidence to build back better.”