Bounce Back Loan Scheme Changes
The Bounce Back Loans scheme was launched in May 2020 to provide financial support to businesses across the UK that were losing revenue and disrupted cashflow as a result of the COVID-19 pandemic. The scheme allows qualifying small businesses to borrow between £2,000 and £50,000 with no fees or interest to pay for the first 12 months. In most cases businesses receive the cash within 24 hours of approval.
The scheme was initially launched for 6 months but has now been extended a number of times (together with all the government-backed loan schemes) until 31 March 2021. This deadline may be further extended as part of the Budget measures on 3 March 2021.
It has now been confirmed that new repayment flexibilities will be offered. These new Pay as You Grow repayment flexibilities will allow businesses to wait up to 18 months before making repayments of the loan.
The new options will also allow borrowers to:
- Move to interest-only repayments for a period of 6 months (this option can be used up to 3 times).
- Pause repayments entirely for up to six months using a repayment holiday. This option is available once over the life of the loan.
Additionally, borrowers will be able to extend the length of their loans from six to ten years (reducing monthly repayments by almost half).
These Pay as You Grow options will be available to more than 1.4 million businesses that have borrowed almost £45 billion through the scheme.
It is also possible to ‘top up’ existing Bounce Back Loans should additional funding be required. This top up applies to businesses who borrowed less than their maximum loan allowance. Currently, this option is set to expire on 31 March 2021.
The scheme is available through a network of 29 British Business Bank accredited lenders including the five largest banks. Banks will not perform any forward-looking test of business viability or other complex eligibility criteria for these loans. Businesses can apply for a loan online using a short and simple online process.