You are here: Home - Credit Cards & Loans - News -

Firms given more time to repay Bounce Back Loans

Written by: Emma Lunn
Small businesses will be able to repay state-backed loans taken out to help survive the coronavirus lockdown over 10 years.

Chancellor Rishi Sunak has introduced a ‘pay as you grow’ initiative to give companies more flexibility about repaying their loans and the option to tailor payments according to individual circumstances.

Borrowers will be able to extend the length of their loans from six to 10 years, make interest-only payments for six months, or pause repayments for up to six months.

Firms can also choose to make no payments on their loans until 18 months after they originally took them out.

These ‘pay as you grow’ options will be available to more than 1.4 million businesses which took out a total of nearly £45bn through the Bounce Back Loan Scheme.

The scheme launched on 4 May 2020. It provides financial support to businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of Covid-19.

Businesses can apply for a loan from £2,000 up to 25% of their business’ turnover, with a fixed interest rate of 2.5% for the duration of the loan. The maximum loan amount is £50,000. Under the loan scheme, the government covers the costs of interest for the first year of the loan.

Find more useful information about credit cards here.

Chancellor 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. Lenders will proactively and directly inform their customers of pay as you grow, and borrowers should only expect correspondence three months before their first repayments are due.”

Richard Bearman, managing director at the British Business Bank, said: “Pay as you grow will provide tangible benefits to Bounce Back Loan recipients, many of whom may have accessed the Bounce Back Loan Scheme to borrow money for their business for the first time. The scheme offers greater flexibility to businesses who may need flexibility in paying off their Bounce Back Loan and enables them to manage their repayments more effectively.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Everything you wanted to know about ISAs…but were afraid to ask

The new tax year is less than a fortnight away and for ISA savers or investors, it’s hugely important. If yo...

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week