The British Business Bank has announced further details of ‘Pay As You Grow’, which helps UK smaller businesses that have taken out a COVID-19 emergency Bounce Back Loan to manage their cashflow and have a better chance of getting back to growth.
Originally announced by the Chancellor of the Exchequer in September 2020, Pay As You Grow (PAYG) will enable businesses who have started repaying their Bounce Back Loans to:
- Request an extension of their loan term to ten 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 and remain responsible for repaying their Bounce Back Loan and fully liable for the debt.
Lenders will start to communicate PAYG options to Bounce Back Loan Scheme borrowers three months before repayments commence. Lenders will inform their customers about PAYG directly, so borrowers should wait until they are contacted by their lender before enquiring about the scheme.
Since May 2020, the Bounce Back Loan Scheme has supported nearly £45 billion of loans to 1.5 million businesses.