The Bounce Back Loan (BBL) was a scheme introduced by the Chancellor, Rishi Sunak, to help businesses access finance during the Pandemic. Under the scheme, businesses could borrow up to 25% of their turnover. The maximum loan available was £50,000.
If you took out a Bounce Back loan and business hasn’t recovered as expected, you may be finding cashflow to be tight and finding money for loan repayments to be difficult. If this is the case, you can still access the Pay As You Grow Scheme to give you greater flexibility to make repayments lower.
What are the options?
The aim of the Pay As You Grow scheme is to further soften the financial burden of re-paying Bounce Back Loans.
The scheme allows greater flexibility to pay back these loans helping you manage your cash flow and improving your chances for growth. Businesses who have started repaying their Bounce Back Loans will be able to:
- Switch to interest-only repayments for 6 months (reducing monthly payments)
- Extend their loan term from six years to 10 years, at the same fixed interest rate of 2.5%
- Take another repayment holiday for up to six months
You can use these options individually or as a combination of each other.
If you use more than one of these options, you will pay more interest overall and the length of your loan will increase.
How can you access Pay As You Grow?
The first repayments for Bounce Back Loans were due from May 2021. Lenders will inform you directly about the options for repayment, but if you do not hear, contact your loan provider prior to the anniversary date of taking out the loan.
Importance of good cashflow management
Pay As You Grow is not a long-term solution if your business has been struggling but it could help keep the wolf from the door. We would suggest you complete a cash forecast to ensure that you will have enough cash to continue to trade. Read our Cashflow Guide for more information.
Our guide includes a cash forecasting tool, which we will happily review – free of charge – if you complete it and send it back to us. If you have a cash problem creeping up on you then this tool will help.