- 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 Treasury’s Pay as You Grow repayment flexibilities
enable borrowers to tailor their repayment schedule, with
the option to extend the length of their loans from six to
ten years (reducing monthly repayments by almost half),
make interest-only payments for six months or 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 their
first repayment, rather than after six repayments have been
made. This will mean that businesses can choose to make no
payments on their loans until 18 months after they
originally took them out.
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, first announced by
the Chancellor in September, will give borrowers the option
to tailor repayments to their individual circumstances.
This will provide more time and greater flexibility to
repay the loans.
From today, lenders will begin reaching out to borrowers to
provide information on repayment schedules and how to
access flexible repayment options.
The Chancellor of the Exchequer, , 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 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
Business Secretary, , 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.
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.
