Small businesses given more time to start repaying Bounce Back Loans

About £45 billion has been borrowed by more than 1.4 million small businesses under the Bounce Back Loan Scheme, which offers loans of up to £50,000. 

Under the existing scheme, businesses are not required to make any loan repayments in the first year, and no interest is charged during this period. However, many businesses face having to start making loan repayments in May, at a time when economic recovery is still expected to be weak. This has led to concerns that many businesses will be forced to close.

In order to alleviate these concerns, Chancellor Rishi Sunak has announced that businesses will now have the option to delay the first repayments for a further six months. This means businesses can opt to make no payments on their loans until 18 months after they originally took them out. Previously, businesses could only request a six-month delay once they already had made at least six repayments.

Under the loan arrangements, known as Pay as You Grow, businesses have the option of:

Extending the payments plans from six to 10 years could help small businesses reduce their monthly payments by almost a half.

Mr 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.”

Banks, which have been processing the loans, have been asked to contact more than 600,000 businesses that borrowed nearly £20 billion between them in May, when the scheme first opened, to provide details about how to access flexible repayment options. They will inform their customers directly, so borrowers should wait until they are contacted by their lender before enquiring about their options.

For more information please click here. 

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Last updated: 16th February 2021