Firms given an extra six months before starting to repay Bounce Back loans

The government is giving companies more time to repay Bounce Back Loans.

The government says businesses that took out a Covid-19 Bounce Back loan can have an extra six months before they have to start to repay it. 

Pay as You Grow repayment flexibilities now include the option to delay repayments for a further six months, meaning businesses can choose to make no payments on their loans until 18 months after they originally took them out.

The option to pause repayments will also now be available to all companies from their first repayment, rather than having to wait until six repayments have been made.

And Pay as You Grow will also enable borrowers to extend the length of their loans from six years to 10 (reducing monthly repayments by almost half) and make interest-only payments for up to six months. 

More than 1.4million businesses borrowed a total of nearly £45billion through the Bounce Back Loan Scheme.

The latest moves are in addition to the government paying the first year's interest on the loan.

Chancellor Rishi Sunak said when he announced the changes yesterday (8 February): “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.”