HM Treasury and the British Business Bank have released further details of the Pay As You Grow Scheme.
It is confirmed that the scheme will enable businesses who have started repaying their Bounce Back Loans to:
- Request an extension to their loan term to 10 years from 6 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 fully liable for the debt.
Borrowers should be aware that they will pay more interest overall if they use one or more of these options, and that the length of the loan will increase in line with any repayment holidays taken.
Am I eligible?
PAYG is available to all businesses who have taken out a Bounce Back loan subject to the restrictions outlined above.
What do I need to do to access it?
Businesses first began to receive BBLS loans in May 2020 and the first repayments will become due from May 2021 onwards. Lenders will start to communicate PAYG options to Bounce Back Loan Scheme borrowers three months before repayments commence.
Who do I need to speak to?
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 repayment options may change according to their choices under the scheme.
