Bounce Back Loan borrowers given more flexibility over repayment terms

Businesses which took out a BBL to get through Covid-19 will have greater flexibility to repay the loans.

Borrowers have the option to tailor payments according to their individual circumstances with the option to delay all repayments for a further six months.

Pay as You Grow

Pay as You Grow will be available to over 1.4 million businesses, which collectively took out nearly £45bn through the BBL scheme.

The Pay as You Grow repayment flexibilities enable borrowers to tailor their repayment schedule. It will provide businesses with the following options:

  • Extend the length of their loans from six to 10 years at the same fixed interest rate of 2.5%
  • Make interest-only payments for six months, with the option to use this up to three times throughout the loan
  • Pause repayments entirely for up to six months. This option is available once during the term of the Bounce Back Loan.

The Chancellor has extended the flexibility of the third option, which will now be available to all businesses from their first repayment, rather than after six repayments have been made. Effectively, 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.

Businesses first began to receive the loans in May 2020 and the first repayments will become due from May 2021 onwards.

Chancellor Rishi Sunak said: ‘Businesses are continuing to feel the impact of extended disruption from Covid-19, and we’re determined to give them the backing and confidence they need to get through the pandemic.

‘That’s why we’re giving Bounce Back Loan borrowers breathing space to get back on their feet, through greater flexibility and time to repay their loans on their terms.’

Lenders to proactively inform customers of Pay as You Grow

The government has confirmed that it expects lenders to reach out to borrowers to provide information on repayment schedules and how to access flexible repayment options, and borrowers should expect correspondence three months before their first repayments are due.

Pay as You Grow will offer greater flexibility to BBL borrowers, giving them the option to tailor repayments to their individual circumstances and by providing more time to repay the loans.


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

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