UK businesses that took out a Bounce Back Loan due to the impact of Covid-19 will now be able to delay all repayments for a further six months.
This latest update to the chancellor of the exchequer Rishi Sunak’s ‘Pay as You Grow’ repayment scheme means that businesses can therefore choose to make no payments on their government-backed loans until 18 months after they originally took them out.
The option to pause repayments will also now be available to all from their first repayment, rather than after six repayments have been made.
In order to tailor their repayment schedule to suit their individual circumstances, the ‘Pay as You Grow’ scheme will enable businesses to extend the length of their loans from six to ten years (reducing monthly repayments by almost half) and make interest-only payments for six months — the government currently covers the costs of interest for the first year of the loan.
“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,” explained Rishi.
“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.”
The government added that lenders will directly inform their customers of ‘Pay as You Grow’, and provide them with information on repayment schedules and how to access flexible repayment options — businesses should only expect correspondence three months before their first loan repayments are due.
The ‘Pay as You Grow’ scheme will provide businesses with the following options: extend the length of the loan from six to ten years; make interest-only payments for six months, with the option to use this up to three times throughout the loan, and pause repayments entirely for up to six months.
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.”