February 10th, 2021

Bounce Back Loans – Pay as you Grow

Many business owners struggling due to coronavirus have had to take out the lifeline of Business Bounce Back Loan (BBL) from the banks when they launched in May 2020 .

The 100% state- backed loan worth up to £50,000, offers no interest charged or repayments needed in the first 12 months.

For the businesses that took these BBLs early the 12 month interest free period will be coming  to an end and repayments will be starting soon.

The treasury is advising banks that have offered the BBL scheme to offer a more flexible approach when repayments are due to be made, in the form of Pay as You Grow.

Pay As You Grow (PAYG)

The new approach is to offer the following concessions:

  1. To extend the length of the loan from six years to ten years.
  2. Allow borrowers to make interest only payments for six months, with an option to use PAYG facility up to three times throughout the loan.
  3. Pause repayments entirely for up to six months. (Interest will still apply after the 12 month)

The Chancellor has now extended the flexibility of the third option, which will be available to all from their first repayment, rather than after six repayments have been made. This will mean that businesses can choose to make no payments on their loans until eighteen months after they originally took them out. (Prior to these changes, no repayments on Bounce Back Loans were required for twelve months.)

How does this affect you?

Remember that you’ll end up paying more in interest overall if you use one of these options.

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Filed under

Business advice COVID-19 Funding HMRC


Alison obtained a First class degree in Accountancy and Management at UCLAN University. She then went on to qualify as a certified accountant in 2006 and became a founder member in 2011.

Alison trained at a practice in Liverpool and, within her 10 years there, she developed as an accounts manager and obtained a varied portfolio of clients which has provided her with a range of experience in accounts, audit, VAT and taxation.
Alison specialises in giving sound jargon-free advice to a range of small and medium sized businesses.

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