The Government has announced greater flexibility in repayments for businesses who took out Bounce Back Loans.
The government has announced that businesses will have greater flexibility to repay their Bounce Back Loans, with options to extend the loan period, make interest-only payments or pause repayments.
The Bounce Back Loan Scheme has seen nearly Â£45 billion borrowed collectively from over 1.4 million businesses across the country. Borrowers will have the option to tailor payments according to their individual circumstances.
The Treasuryâ€™s Pay as You Grow repayment flexibilities give borrowers the option to extend the length of their loans from six to ten years (reducing monthly repayments by almost half), make interest-only payments for six months or pause repayments for up to six months.
The Chancellor has now extended the flexibility of the third option, which will now be available to all from their first repayment, rather than after six repayments have been made. This will mean that businesses can choose to make no payments on their loans until 18 months after they originally took them out. This is in addition to the government covering interest costs for the first year of the loan.
Lenders will be reaching out to borrowers to provide information on repayment schedules and how to access flexible repayment options. Borrowers should only expect correspondence three months before their first repayments are due.
The Chancellor of the Exchequer, Rishi Sunak, said, â€œBusinesses are continuing to feel the impact of extended disruption from Covid-19, and weâ€™re determined to give them the backing and confidence they need to get through the pandemic. Thatâ€™s why weâ€™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.â€
Business Secretary, Kwasi Kwarteng, added, â€œThese flexible repayment options will give businesses the time they need to recover from the pandemic before paying back loans, giving them the breathing space and confidence to build back better.â€
Image courtesy HM Treasury