Credit Rating

Treasury written question – answered at on 13 July 2021.

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Photo of Owen Thompson Owen Thompson SNP Chief Whip

To ask the Chancellor of the Exchequer, what assessment he has made of the impact of receipt of (a) Coronavirus Job Retention Scheme furlough payments and (b) Bounce Back Loan Scheme payments on the recipients' credit ratings.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

The CJRS supports businesses to preserve employer-employee matches by providing a mechanism to pay the wages of furloughed employees. Through easing the financial burden, the CJRS supports jobs, reduces the risk of permanent business closures and reduces the risk of large losses in incomes, through wage support to furloughed employees.

By maintaining employer-employee matches, the CJRS therefore seeks to reduce the risk of long-term labour market scarring. As of 14 June 2021, there have been 11.6 million unique jobs supported by the CJRS since its inception. A total of 1.3 million employers have made a claim through the CJRS since it started in March 2020, totalling £65.9 billion in claims.

The Government launched the Bounce Back Loan Scheme (BBLS) on 4 May 2020 to ensure that the smallest businesses could access loans of up to £50,000, capped at 25% of businesses’ turnover in a matter of just days.

It is important to note that businesses are responsible for repaying any facility they take out and failure to keep up with their repayments may impact a borrower’s credit rating.

In order to give businesses further support and flexibility in making their BBLS repayments, the Chancellor has announced “Pay as You Grow” (PAYG) options. PAYG will give businesses the option to repay their BBLS facility over ten years, 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.

Please be reassured, borrowers who make use of these PAYG options will not be penalised through their credit rating for doing so.

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