Can’t repay your Bounce Back Loan?

Find out what options are available to you if you can’t afford to pay back your Bounce Back Loan.

May 2021 marks the first anniversary since the Government launched its Bounce Back Loan Scheme to help businesses affected by the coronavirus pandemic.

If your business has taken out a Bounce Back Loan, you’ll be expected to make monthly repayments after the first anniversary of your loan, a month in arrears.

However, if you’re likely to struggle to start repaying your loan and need more flexibility, the Government has put in place some additional measures to help ease your financial difficulties, under a so-called ‘Pay As You Grow’ scheme.

What is Pay As You Grow?

The Pay As You Grow measures are for borrowers who have accessed the Bounce Back Loan Scheme.

They give you the option to:

• extend the length of your Bounce Back Loan from six years to 10 years
• make interest-only payments for six months, with the option to do this up to three times throughout the loan
• request a six-month repayment holiday

You can use a single option or several in combination.

You can also repay your loan in full early, without facing early repayment charges for doing so.

As an example, you could, if your business is still struggling, opt to:

• extend the length of the loan from six years to 10 years, and
• make interest-only payments for 18 consecutive months

While this would lower your monthly payments, it would mean you’re paying back your loan over a longer period.

Also, over the course of 18 months, you would only have repaid the interest and none of the initial amount you borrowed (known as the principal).