Bounce back loan borrowers can delay repayments by extra six months
Businesses that took out government-backed Bounce Back Loans to get through Covid-19 will now have greater flexibility to repay their loans, the government announced.
- Bounce Back Loan borrowers will now have the option to tailor payments according to their individual circumstances
- Chancellor makes support even more generous 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 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. 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 ten 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.
These Pay as You Grow options will be available to more than 1.4 million businesses which took out a total of nearly £45 billion through the Bounce Back Loan Scheme.
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 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 reaching out to borrowers to provide information on repayment schedules and how to access flexible repayment options. We would be interested to hear form anyone who has received contact?
We are told, 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.
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
The British Business Bank run the Bounce Back Loan Scheme.
The government has made clear that lenders are expected to offer PAYG options to all borrowers under the Bounce Back Loan Scheme.
Following discussions with lenders, all borrowers should receive identical information on PAYG being offered.
The Financial Conduct Authority’s conduct rules require lenders to show due consideration and appropriate forbearance to borrowers in difficulty.
Under the Bounce Back Loan Scheme, no repayments or interest are due from the borrower during the first 12 months of the loan term.
Please see a summary of existing support.