Under the current scheme, firms get interest-free loans for the first year. However, many businesses that took out a loan last year will have to begin repaying the money lent to them in May.
Because much of the country is likely to remain in lockdown for many weeks to come, the Government is making changes to its existing ‘Pay as you Grow’ (PAYG) initiative. Small businesses will have greater support to repay their loan, without the repayments adversely affecting their recovery.
Businesses will now have the option to:
- Extend the term of the loan from six to ten years
- Pay interest-only for six months, up to three times during the life of the loan
- Pause repayments entirely for up to six months.
The options are available to all borrowers from their first repayment, rather than after six repayments have been made, as previously.
Effectively, businesses can choose to make no payments on their loans until 18 months after they originally took them out.
Applying for a Bounce Back Loan
The BBLS remains open to new claims until the end of March.
Small and medium-sized businesses can borrow from £2,000 up to 25 per cent of their turnover (capped at £50,000).
The Government provides the banks with a 100 per cent guarantee, which means that lenders only make minimal checks.
Following the first interest-free year, a fixed interest rate of 2.5 per cent a year applies.
If you already have a loan but borrowed less than you were entitled to, you can still top up your existing loan to your maximum amount.
Businesses that intend to use the BBLS must make an application or top up an existing loan by the 31st March 2021.
If you haven’t yet made an application for the scheme or would like help with the PAYG scheme, please contact us.