Not too often lately, have we had good news, but recently we have heard that anyone who has borrowed money using the bounce back loan scheme has now been given extra flexibility over the terms of repayment. The so-called ‘Pay As You Grow’ (PAYG) repayments has given borrowers the option to extend the length of their loans for up to 10 years which will come as a massive relief to companies as this could potentially reduce their monthly payments almost by half!
There is also the option to make interest only repayments or pause repayments altogether for up to a further 6 months on top the original 12 months in the original terms.
This could bring some obvious respite to the cash flow for many business owners out there, in particular for the hospitality trade who have took an almighty hit during this pandemic. The ball will be set rolling by the lenders, who will contact businesses that have taken out a loan, providing information on repayment schedules and how to access them. So please, when the next email arrives in your inbox or letter arrives on your door mat from the bank, make sure you open it and read it, it could really help you out.
There has been an unbelievable amount of disruption to all sectors due to Coronavirus and the Chancellor, Rishi Sunak, has said he believes these measures will help us all get back on our feet. If you’re a borrower, you don’t need to contact your lender as they will be in touch around 3 months before your first repayment is due and you will be given the following options:
• Extend the length of the loan from 6 years to 10 at the same fixed interest rate of 2.5%.
• Make interest-only payments for 6 months, with the option to use this 3 times during the loan period.
• Pause repayments altogether for up to 6 months. You can only use this once during the loan period.
The Government made it perfectly clear that all lenders are expected to offer PAYG options anyone making use of the Bounce Back Loans.
The chance to manage repayments more effectively has obvious benefits to businesses, and hopefully with an end in sight to the virus the light at the end of the tunnel is getting a little brighter day by day.
If you want to get in touch about how we might be able to help you, please don’t hesitate to contact us on firstname.lastname@example.org, or call 07413 101144.