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Chancellor announces Pay as You Grow flexible repayment on Bounce Back Loans


If you took out a government backed Bounce Back Loan the Chancellor has announced launch of new Pay as You Grow flexible repayment options giving you greater flexibility to repay.

The Chancellor’s Pay as You Grow repayment flexibilities now include the option to delay all repayments for a further six months, meaning businesses can choose to make no payments on their loans until 18 months after they originally took them out. The option to pause repayments will now be available to all from their first repayment, rather than after six repayments have been made.

Pay as You Grow will also enable borrowers to extend the length of their loans from six to ten years (reducing monthly repayments by almost half) and make interest-only payments for six months, in order to tailor their repayment schedule to suit their individual circumstances.

These Pay as You Grow options will be available to more than 1.4 million businesses which took out a total of nearly £45 billion through the Bounce Back Loan Scheme.

This is in addition to the government covering the costs of interest for the first year of the loan.

Pay as You Grow’s additional support, first announced by the Chancellor in September, will give borrowers the option to tailor repayments to their individual circumstances.

This will provide more time and greater flexibility to repay the loans.

From today, lenders will begin reaching out to borrowers to provide information on repayment schedules and how to access flexible repayment options.

Lenders will proactively and directly inform their customers of Pay as You Grow, and borrowers should only expect correspondence three months before their first repayments are due.

It will provide businesses with the following options:

  1. Extend the length of the loan from six years to ten
  2. Make interest-only payments for six months, with the option to use this up to three times throughout the loan
  3. Pause repayments entirely for up to six months

Further Information

The British Business Bank run the Bounce Back Loan Scheme.

The government has made clear that lenders are expected to offer PAYG options to all borrowers under the Bounce Back Loan Scheme.

Following discussions with lenders, all borrowers should receive identical information on PAYG being offered.

The Financial Conduct Authority’s conduct rules require lenders to show due consideration and appropriate forbearance to borrowers in difficulty.

Under the Bounce Back Loan Scheme, no repayments or interest are due from the borrower during the first 12 months of the loan term.

Please see a summary of existing support.

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