More flexibility for businesses that took government Bounce Back Loans
Any businesses that took out a government Bounce Back Loan to get through the coronavirus pandemic will now have greater flexibility in when and how they repay, it has been announced.
More than 1.4 million businesses originally took out a Bounce Back Loan up to a maximum value of £50,0000. In total, companies borrowed nearly£45 billion from various commercial lenders, with the government covering fees and interest for the first 12 months.
The loans have played a vital role supporting all types of businesses through the pandemic thus far. However, as the crisis has rumbled on into 2021, there is a concern that the 12-month repayment holiday will not be enough to protect businesses, many of which have not had enough time to get back on their feet.
That’s why the government has announced a new repayment scheme, designed to give businesses more time and flexibility with their loan repayments.
A new ‘Pay as You Grow’ repayment scheme offers more flexibility for business borrowers, allowing businesses to delay repayments for a further six months. This means that Bounce Back Loan borrowers can take a total of 18 months before any repayments are due. In addition, borrowers can pause repayments after making just one repayment, rather than waiting until after six repayments are made.
Pay as You Grow will also allow borrowers to reduce monthly repayments by extending the loan term from six years to ten years and making interest-only repayments for six months.
Miles Grady, Director of said: “Many businesses are still struggling to cope with the effects of the coronavirus pandemic. This announcement from the government should give more businesses the confidence they need to survive and rebuild as the economy starts to open up.”
What changes for businesses? A summary:
- Businesses will have the option to extend the length of the loan from six years to ten years
- Businesses will have the option to make interest-only payments for six months, with the option to use this up to three times throughout the loan
- Businesses will have the option to pause repayments entirely for up to six months
Can I still get a Bounce Back Loan for my business?
The Bounce Back Loan scheme is still open for applications, but only until 31 March 2021. The scheme is designed for small and medium-sized businesses, looking to borrow up to 25% of their turnover (to a maximum of £50,000).
If your business already has a Bounce Back Loan, but you have borrowed less than you were entitled to, you can still top up your existing loan to the maximum amount before 31 March.
Eligible businesses must:
- Be based in the UK
- Be established before 1 March 2020
- Have been adversely impacted by the coronavirus
For more information on the Bounce Back Loan scheme, or our cloud accountancy services, please speak to a member of the team. Call: 0808 281 0303.