On 8 February 2021, the Chancellor announced repayment flexibilities for Bounce Back Loan borrowers, with the ability to tailor payments according to individual circumstances. The scheme provides the option for small and medium-sized businesses to access finance more quickly during the coronavirus outbreak.
The new options include:
- Extending the length of the loan from six to ten years (reducing monthly repayments by almost half),
- Making interest-only payments for six months, with the option to use this up to three times throughout the loan
- Pausing repayments for up to six months. This will be available to all from their first repayment, rather than after six repayments have been made. This means that businesses can choose to make no payments on their loans until 18 months after they originally took them out.
This is in addition to the Government covering the costs of interest for the first year of the loan.
From today lenders should begin reaching out to borrowers to provide information on repayment schedules and how to access flexible repayment options. Borrowers should only expect correspondence three months before their first repayments are due.
Small and medium-sized businesses can apply to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000. The scheme is open to applications until 31 March 2021.
If a business already has a Bounce Back Loan but borrowed less than they were entitled to, the existing loan can be topped up to the maximum amount. The top-up request must be made by 31 March 2021.