Under the Bounce Back Loan scheme, no repayments are due from the borrower for the first 12 months of the loan, giving businesses the breathing space they need during this difficult time. In addition, the Government covers the first 12 months of interest payments charged to the business by the lender.
In order to give businesses further support and flexibility in making their repayments, the Chancellor has announced “Pay as You Grow” (PAYG) options. PAYG will give businesses the option to repay their Bounce Back loan over ten years. This will reduce their average monthly repayments on the loan by almost half. Businesses will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments).
Together, the 12-month payment holiday and interest-free period for borrowers, along with the PAYG options, provide a generous support package giving businesses the time to get back on their feet.