Following an announcement by Chancellor, Rishi Sunak on 5 February 2021, businesses will now be given more time to make their first payment on “bounce back” loans and will have the ability to spread the loan over 10 years.
The Bounce Back Loan Scheme (BBLS), which was originally launched on 4 May 2020, allowed businesses to borrow up to 25% of their turnover (with a £50,000 maximum amount that could be borrowed) at an interest rate of 2.5% per annum.
Under the existing scheme, businesses get interest free loans for the first year. However, this would see many having to start repaying the loans in May, when economic recovery is still expected to be weak.
Under the new arrangements announced on Friday (5 February 2020), businesses will now have the options of:
- Extending the length of the term from six years to 10
- Making interest free payments for six months, with the option to use this up to three times throughout the loan
- Pausing repayments entirely for up to six months
This means that, along with the initial 12-month interest and repayment holiday, businesses will have 18 months before having to start paying back what they owe.
Mr 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.”
For further information or advice on how COVID-19 may be affecting your business please get in touch with a member of the Baines Wilson LLP, on 01524 548494 or 01228 552600.