BOUNCE BACK LOAN borrowers can now extend the length of their loans from six to ten years. The option reduces monthly repayments by almost half.
Pay as You Grow repayment borrowers can make interest-only payments for six months. They can also pause repayments for up to six months.
The repayment pause can start from when the first repayment is due, rather than after six repayments have been made. This means businesses can make no payments on their loans until 18 months after they took them out.
These Pay as You Grow options are available to more than 1.4 million businesses which took out £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
From today, lenders will begin contacting borrowers to provide information on repayment schedules and how to access flexible repayment options.
The Chancellor of the Exchequer, 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 only expect correspondence three months before their first repayments are due.”
Bounce Back Loan lenders
The British Business Bank runs the Bounce Back Loan Scheme.
The government made clear that lenders are expected to offer PAYG options to all borrowers under the 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.