Bounce Back Loan repayments – Pay as You Grow

Since May 2021, early users of the Government-backed Bounce Back Loan Scheme (“BBLS”) may have already started making their first few monthly repayments, now that the interest and repayment free period has come to an end.

If your business is struggling to make the monthly repayments, there are a suite of options available, known as Pay as You Grow (PAYG). These options are designed to help manage cashflow and provide a better chance of getting your business back to growth.

What are my options?

There are three options available to businesses that have started repaying their Bounce Back Loan:

  1. Request an extension of your loan term to 10 years from 6 years, at the same fixed interest rate of 2.5%.
  2. Reduce your monthly repayments for 6 months by paying interest only. This option is available up to three times during the term of a Bounce Back Loan.
  3. Take a repayment holiday for up to 6 months. This option is available once during the term of a Bounce Back Loan.

Be aware that you’ll pay more interest overall if you use one or more of these options, and that the length of the loan will increase in line with any repayment holidays you take.

As a borrower, you can use these options individually or in combination with each other. You still remain responsible for repaying your Bounce Back Loan and are fully liable for the debt.

Three months before repayments commence, borrowers should be contacted directly by their lender to communicate PAYG options.

Using Pay As You Grow will not, in principle, affect a business’s ability to obtain finance in the future. While utilising the support via Pay As You Grow will not affect a borrower’s credit rating, it may affect lenders’ future creditworthiness assessments.

For further information or advice on funding for your business, please get in touch with a member of our Corporate Finance team on 01903 234094.

A version of this blog originally appeared on the website of PrimeGlobal member firm, Larking Gowen.