Bounce Back Loan repayments extended to 10 years
The government has extended the repayment terms for Bounce Back Loans (BBLS) to 10 years under a new Pay as You Grow (PAYG) scheme, which is designed to give borrowers the option to tailor repayments and provide more time and greater flexibility to repay the loans.
1.4 million businesses took out loans of nearly £45bn last year and the first repayments are due from May 2021 onwards. The BBLS helps SME’s borrow up to 25% of their turnover, up to a maximum of £50,000. The scheme is open to applications until 31 March 2021.
Under the government’s Pay as You Grow repayment scheme, borrowers are able to tailor their repayment schttps://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan#historyhedule to their individual circumstances with the following options:
- Extend the length of their loans from six to 10 years at the same fixed interest rate of 2.5% (reducing monthly repayments by almost half)
- Make interest-only payments for six months, with the option to use this up to three times throughout the loan
- Pause repayments for up to six months
Pausing repayments will now be available to all from their first repayment, rather than after six repayments have been made. This means businesses can choose to make no payments on their loans until 18 months after they originally took them out.
Under the BBLS, no repayments are due from the borrower during the first year of the loan, with the government covering the costs of interest for the first year of the loan.
Lenders will contact businesses directly three months before their first repayments are due to discuss their options.