Businesses that took out a government Bounce Back loan to help them through the Coronavirus crisis now have more time and flexibility to repay.
The Treasury has announced that companies who accessed the scheme would be contacted with options to extend the term length of the loan from six to 10 years, as well as delay repayments for up to six months.
The new ‘pay-as-you-grow’ initiative set up by the Chancellor will allow businesses to repay their loans in a schedule more tailored to their circumstances. Lenders are expected to proactively contact businesses about the scheme three months before the first repayment is due. Under the Bounce Back Loan Scheme, no repayments or interest are due from the borrower during the first 12 months of the loan term.
1.4 million businesses across the UK, including 150,000 in the North-west, have taken out out a total of nearly £45 billion through the 100% government-backed Bounce Back Loan Scheme.
Under the existing scheme, firms can receive interest-free loans for the first year with many scheduled to start repaying in May. New proposals give businesses three new options:
- Extending the length of the loan from six years to 10;
- Making interest-only payments for six months, then repaying the principal on a phased basis with other interest-only periods;
- Delaying repayments entirely for up to six months.
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.”
Further information about the Bounce Back Loan scheme is available from the government website.