Enterprises that have taken advantage of government assistance during COVID-19 in the form of Bounce Back Loans will find help readily available when making repayments. The Pay As You Grow scheme is one such option, and in the next passages, we’ll explore what benefits businesses can gain from this government supported solution.
What is the Pay As You Grow scheme?
Pay As You Grow was first announced by Chancellor Sunak back in September last year, and it is designed to assist UK businesses that have now begun to make repayments on their Bounce Back Loans.
The scheme allows enterprises to ask for an extension to be added to their loans term. Loans can be extended from six years to 10 years, while retaining an interest rate that is fixed at 2.5 per cent.
Businesses with Bounce Back Loans can also reduce the size of their monthly repayments for a total of six months and pay only the interest instead. During the term of the Bounce Back Loan they have accepted, a firm can take advantage of this option up to three times.
Additionally, enterprises can benefit from a repayment holiday on their Bounce Back Loan and avoid paying back instalments for a six-month period. This option can only be used once over the set term of a loan.
Businesses that have borrowed are entitled to take advantage of these options either individually or combined with one another to best suit their financial circumstances.
It is worth noting, however, that companies that use these one or multiple repayment options as part of the Pay As You Grow Scheme will overall be required to pay more interest. Companies should also be aware that if a repayment holiday is taken, the length of the loan term will increase proportionately as a result.
How can Pay As You Grow be accessed?
UK companies started to receive Bounce Back Loans initially back in May last year, and now the first repayments for many businesses are due. Many lenders have already started to communicate the Pay As You Grow options for the Bounce Back Loan Scheme to their borrowers.
As lenders are informing their customers about Pay As You Grow options directly, borrowers should wait to be contacted by their chosen lender before making any enquiries regarding the scheme.
Lenders will guide their customers on how their repayment options might alter according to the choices they make under the scheme. However, borrowers will remain entirely responsible for the repayment of their Bounce Back Loans and are completely liable for the acquired debt.
How personal accountants can help
For over 10 years, our specialist team at Adaptive Accountancy has assisted local businesses with a hand-picked selection of services, from day-to-day accounting and payroll to end of year tax returns. With our dedicated accountancy services, Goole businesses can benefit from an expert eye on their finances and professional advice whenever required. If you need help forming a plan to pay back your loan, contact us now for guidance.