Bounce Back Loan Scheme (BBLS) - Pay As You Grow (PAYG)
Posted on 14th February 2021 at 19:30
About the scheme
Bounce Back Loan Scheme (BBLS) is a government scheme that helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover up to £50,000. The scheme that enables smaller businesses to access finance more quickly during the coronavirus (Covid-19) outbreak. The scheme is open to applications until 31 March 2021.
Pay As You Grow (PAYG) was introduced by the Chancellor on 24 September 2020, a system providing flexibility for repaying a Bounce Back Loan.
How do I access Pay As You Grow?
On Saturday 6 February 2021, the Chancellor of the Exchequer announced further details about Pay As You Grow, to support businesses that have taken out a Bounce Back Loan to manage their cashflow and have a better chance of getting back to growth.
Businesses that took out government-backed Bounce Back Loans to get through Covid-19 will now have greater flexibility to repay their loans
PAYG will provide businesses with the following options:
• request an extension of their loan term to 10 years from six 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.
Under the Bounce Back Loan Scheme, no repayments or interest are due from the borrower during the first 12 months of the loan term. As now Bounce back loan borrowers can delay repayments by extra six months, this means that businesses can choose to make no payments on their loans until 18 months after they originally took them out.
Lenders will inform their customers about PAYG directly, so borrowers should wait until they are contacted by their lender before enquiring about the scheme. Borrowers should only expect correspondence three months before their first repayments are due.
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.
In the first instance, businesses who have concerns regarding repaying debt should contact their lender.
You can read our Blog Article with details of the Covid-19 Loans Schemes if you Click Here.
Bounce Back Loan Case Studies
The loans have supported tens of thousands of smaller businesses funded through the British Business Bank’s programme. You can Click Here to read some of the Bounce Back Loan Case Studies.
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