On Monday 8th February 2021 the British Business Bank, the UK’s economic development bank, provided further details of Pay As You Grow.
This helps smaller UK businesses that have taken out a Covid-19 emergency Bounce Back Loan to manage their cashflow and have a better chance of getting back to growth.
Originally announced by the Chancellor of the Exchequer in September 2020, Pay As You Grow (PAYG) will enable businesses that have started repaying their Bounce Back Loans to:
- request an extension of their loan term to 10 years from six years, at the same fixed interest rate of 2.5%
- reduce their monthly repayments for six months by paying interest only. This option is available up to three times during the term of their Bounce Back Loan
- take a repayment holiday for up to six months. This option is available once during the term of their Bounce Back Loan
Borrowers can use these options individually or in combination with each other and remain responsible for repaying their Bounce Back Loan and are fully liable for the debt.
Lenders will start to communicate Pay As You Grow (PAYG) options to Bounce Back Loan Scheme borrowers three months before repayments commence. Lenders will inform their customers about PAYG directly, so borrowers should wait until they are contacted by their lender before enquiring about the scheme.
Lenders will advise customers about how their payment profiles may change according to their choices under the scheme. Businesses first began to receive BBLS loans in May 2020 and the first repayments will become due from May 2021 onwards.
Businesses who have concerns regarding repaying debt should contact their lender and can find additional links to resources on the British Business Bank’s Finance Hub.