CBILS and BBL's - Bank Loans

CBILS and BBL's > More Business Support: CBILS and BBLs

Pay As You Grow (PAYG) is a scheme originally announced by the Chancellor of the Exchequer back in September 2020, and is a way to provide additional support to those businesses who have started to pay back their Bounce Back Loans (BBLs). This will be available for over 1.4 million businesses that collectively took out nearly £45 billion through the BBL scheme! PAYG will enable businesses to:

1. Request an extension of their loan term to 10 years from 6 years, whilst maintaining the current interest rate of 2.5%.
2. Reduce their monthly repayments (by almost half) for 6 months by only paying their interest. This can be carried out a maximum of three times during the period of their Bounce Back Loan.
3. Take a repayment holiday of up to 6 months, which is only available once during the duration of the Bounce Back Loan.

Increased Flexibility

Since the initial announcement, the Chancellor has extended the flexibility of the third option which now means a business doesn’t have to wait until they have made 6 repayments to be entitled to the payment holiday. This can now be taken after the first payment has been made.

As the first repayments are due from May 2021 (a year after the loans started to be received), adding on this 6 month holiday means that some businesses will not have to make any payments on their loans until 18 months after they first took the BBL out. Giving businesses the much-needed breathing space to get back up and running before they need to think about repayments.

The additional support that PAYG is providing means that borrowers are able to tailor their repayments to their individual circumstances. This means business owners will have more time to repay their loans, and create a repayment plan that fits within their financial plans.

A Word From The Chancellor

Rishi Sunak is the voice behind this new PAYG scheme, and has said ‘We are giving Bounce Back Loan borrowers some breathing space to get back on their feet, through greater flexibility and time to repay their loans on their own terms.’

Business secretary, Kwasi Kwarteng also added ‘The comprehensive and generous financial support package we have delivered across the UK has protected jobs, saved businesses and kept local economies on the move’.

British Business Bank - The Lenders

The British Business Bank are the accredited lenders of the Bounce Back Loan scheme, and the Government has made it clear that they are all expected to offer the pay as you go options to businesses they have provided BBLs to. It has also been confirmed that during the first 12 months of the loan agreement, the borrower (business owner) is not required to make any repayments or payments for interest due.

If you would like any further information on any of the loans the Government has recently announced, please feel free to give us a call for advice.