As pandemic restrictions come and go, the continuously changing information on what government backed funding/schemes are available for businesses can be confusing.
We've taken the time to understand the new changes — and what this means for businesses — so that you don't have to.
The latest news released by the Chancellor of the Exchequer, Rishi Sunak, is the announcement of the Pay as you Grow (PAYG) scheme.
The PAYG scheme aims to support businesses who took out a Bounce Back Loan (BBL) back in March 2020 when Covid-related business interruption first started, as the time to repay these loans is fast approaching.
How can it help businesses?
The PAYG scheme will allow businesses that are repaying their BBLs to:
- request an extension of their loan term to 10 years from six years, at the same fixed interest rate of 2.5%
- reduce their monthly repayments for six months by paying interest only. This option is available up to three times during the term of their BBL.
- take a repayment holiday for up to six months. This option is available only once during the term of their BBL.
The three options can be used individually, or can be combined with one another depending on the needs of the company.
Why have the government introduced it?
Last March, many businesses were hoping that we’d be in a better position one year on, and would be ready to start paying back the loan. Therefore, the government has brought in these options to help with repayments if firms are still experiencing interruption.
BBLs were available for access from May 2020, with the first repayments coming due in May 2021.
Is it right for my business?
For businesses that have taken out a BBL, lenders should communicate with them three months before repayments are due, and will explain all options that are available.
Alternatively, you can speak to your trusted advisors, or us here at ABL, and we will talk you through the new scheme and your options, so that when you speak to your lender you know what actions you want to take.