How to repay your Bounce Back Loan using Pay As You Grow
When the government launched the new Bounce Back loans in response to helping businesses get back on their feet following the COVID-19 pandemic, the issue of paying back the sum of money was no doubt a big question for those looking at borrowing.
Thankfully, there will now be more flexibility. Options for tailored repayments have been extended, dependant on how much your business is earning.
Bounce Back Loan Pay As You Grow Initiative
The Bounce Back Loan Pay As You Grow initiative will make it possible for borrowers to extend the length of their loans from six to ten years. This in turn will reduce monthly repayments by up to half.
The new repayment scheme will also allow businesses to opt to delay all bounce back loan repayments for a further six-months, allowing them to make no payments on their loans up-to 18 months after they originally took them out.
The Pay As You Grow repayment scheme is geared towards helping the 1.4 million businesses who sought the financial help of the Bounce Back loans during the crisis. With uncertainty still surrounding the business climate, these changes will give some much-needed breathing space to those still recovering and rebuilding.
In addition, the Chancellor has also adapted the interest rates on the Bounce Back Loans. This means that as well as covering the cost of interest for the first year of the loan, the government will now also make interest-only payments possible for six months, enhancing the ways in which a person can tailor repayment schedules to better suit their individual circumstance.
How will lenders implement these changes?
The government has indicated that lenders will be responsible for proactively and directly informing their customers of the Bounce Back Loan Pay As You Grow initiative. But if you’re worried that you haven’t heard anything regarding these latest changes yet, then don’t panic.
The legislation states that lenders won’t be expected to contact their customers until three months before the first repayments are due. From there, you’ll be given the following options:
- Extend the length of the loan from six years to ten
- Make interest-only payments for six months, with the option to use this up to three times throughout the loan
- Pause repayments entirely for up to six months
The changes are set to make a big difference to those who are facing bounce back loans repayments. Pay As You Grow should help to ensure that the helping hand that has assisted many through the last 18-months, continues to be a scheme centred on securing the future of businesses, rather than adding any extra pressures.