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Soundbite Saturday - BBLS 'Pay As You Grow'

Writer's picture: KeySMEKeySME

Originally announced by the Chancellor, Rishi Sunak, back in Sept 2020, Pay As You Grow (PAYG) is designed to support smaller businesses that have utilised the Bounce Back Loan Scheme (BBLS) to manage their cashflow and have a better chance of getting back to growth.


Interesting, tell me more . . .


The PAYG enhancement will enable businesses that have started repaying their Bounce Back Loans to:

  • Request an extension to their loan term from 6 years to 10 years, at the same fixed rate of interest at 2.5%.

  • Reduce monthly repayments for 6 months by switching to an interest only structure midterm. This option will be available up to 3 times during the term of the Bounce Back Loan.

  • Request a repayment holiday for up to 6 months. This option will be available once during the term of the Bounce Back Loan.

These options can be taken individually, or combined, to suit the needs of the borrower.


It's also important to remember that the borrower remains responsible for repaying their Bounce Back Loan and fully liable for the debt.


What happens next?


Lenders will communicate the PAYG options directly to Bounce Back Loan Scheme borrowers three months before repayments are due to commence. Lenders will also outline to borrowers how their repayment profiles will change depending on their PAYG choices.


As a reminder, the first BBLS borrowers received funds back in May 2020 and therefore the first repayments will become due from May 2021 onwards (as the 12 month repayment holiday and covered interest expire) - It's important to check your paperwork and/or digital communications to confirm when your BBLS repayments are due to kick in.


To further understand how the new PAYG enhancements could work for you and your business, get in touch with the team at KeySME today - We can talk you through the key features and assist with any lender discussions.


Original BBLS - Key Features

  • For businesses looking to borrow between £2,000 and £50,000

  • Fixed rate of interest @ 2.5% per annum

  • Funds delivered by way of a term loan to be repaid over 6 years

  • No set-up/arrangement fees and the first 12 months of interest covered by government

  • No capital repayments due during the first 12 months

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