Businesses who took out a Bounce Back Loan (BBL) will now have “greater flexibility” to repay their loan, it has been announced.
It comes after the Government introduced new flexible repayment options under the Pay as You Grow scheme.
Launched last year, the Bounce Back Loans scheme supports small and medium-sized enterprises (SMEs) by providing Government-guaranteed loans of up to £50,000. With extremely generous repayment terms – such as no interest or payments due in the first year – the scheme helped 1.4 million organisations recover from Covid-19 disruption.
But with much of the UK still in enforced lockdown, HM Treasury has further extended the terms to support organisations yet to return to profitability.
Under the Pay as You Grow scheme, businesses have been allowed to “tailor” their repayment schedule to reflect their circumstances. This could involve extending the length of their loans from six to 10 years (cutting monthly repayments by almost half), making interest-only repayments, or pausing repayments altogether.
However, the latest changes will allow businesses to pause repayments from their first repayment, rather than after six repayments have been made – meaning businesses could choose to make no payments until 18 months after they first took the loan out.
Commenting on the changes, 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.”
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