Bounce Back Loan Scheme
Supporting UK businesses during coronavirus, the Bounce Back Loan Scheme is now closed.
Greater flexibility with repayments – Pay as You Grow
Businesses that took out government-backed Bounce Back Loans to get through Covid-19 have greater flexibility to repay their loans.
Lenders continue to inform their customers about PAYG directly and will advise customers about how their repayment options may change according to their choices under the scheme. Borrowers remain responsible for repaying their Bounce Back Loan and fully liable for the debt.
Pay As You Grow (PAYG) enables businesses who are repaying their Bounce Back Loans to:
request an extension of their loan term to 10 years from six years, at the same fixed interest rate of 2.5%
reduce their monthly repayments for six months by paying interest only. This option is available up to three times during the term of their Bounce Back Loan
take a repayment holiday for up to six months. This option is available once during the term of their Bounce Back Loan.
Borrowers can use these options individually or in combination with each other. Borrowers should be aware that they will pay more interest overall if they use one or more of these options, and that the length of the loan will increase in line with any repayment holidays taken.
If you want Pay as you Grow to start from your next loan payment, you need to apply at least 20 days before that payment is due.
Will using Pay as You Grow affect my ability to obtain finance in the future?
Using Pay as You Grow will not, in principle, affect a business’s ability to obtain finance in the future. Pay As You Grow is designed to alleviate borrowers’ financial difficulty, even before it arises, by giving borrowers flexibility in meeting their repayment obligations. Using Pay as You Grow will not affect a borrower’s credit rating, but it may affect lenders’ future creditworthiness assessments. For example, when considering a request for additional funding a lender will take into consideration incomings and outgoings, including existing debt repayments such as the Bounce Back Loan Scheme facility. It will also consider a business’s total debt exposure, which will again include the outstanding Bounce Back Loan Scheme facility.
Other business finance support options
In the first instance, businesses who have concerns regarding repaying debt should contact their lender.
In addition, the British Business Bank has a range of guidance and resources available to all businesses, including content on managing your cashflow and a list of independent advice services:
Guide to business resilience
The British Business Bank’s Guide to Building Business Resilience is packed with impartial, practical, and actionable information to help smaller businesses manage costs, boost profitability, and increase resilience.
The Finance Hub
Designed to simplify the complexities of business finance, the Finance Hub is a comprehensive online resource that empowers businesses of all sizes, from start-ups to established companies, offering a diverse range of information and resources to navigate the world of finance. It serves as a centralised hub where you can find independent and impartial guides, checklists, and articles, carefully curated to provide you with the knowledge needed to make informed financial decisions for your business.
