More than 1.4 million small firms borrowed about £45bn collectively under the Bounce Back Loan scheme, which offers loans of up to £50,000. Businesses first began to receive the loans in May 2020 and the first repayments will become due from May 2021 onwards.
Small firms will now get more time to repay state-backed loans taken out to help survive the coronavirus lockdown. The changes include giving companies an option to extend the length of the loan from six to ten years under a “pay-as-you-grow” (PAYG) initiative.
Under the new arrangements, borrowers will have the options of:
- Tailoring their repayment schedule, with the option to extend the length of their loans from six to 10 years at the same fixed interest rate of 2.5%;
- Making interest-only payments for six months, with the option to use this up to three times throughout the loan;
- Pausing repayments entirely for up to six months (this will mean that businesses can choose to make no payments on their loans until 18 months after they originally took them out).
This is in addition to the government covering the costs of interest for the first year of the loan.
Banks, which have been processing the loans, will contact borrowers to explain the new options available to their business customers.
More info from the British Business Bank, which runs the Bounce Back Loan Scheme, HERE.