Bounce Back Loan Scheme

(asked on 16th March 2021) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will work with banks to allow businesses to defer repayment of bounce back loans until they can reopen once covid-19 restrictions are eased.


Answered by
John Glen Portrait
John Glen
Paymaster General and Minister for the Cabinet Office
This question was answered on 23rd March 2021

Under the Bounce Back Loan scheme, no repayments are due from the borrower for the first 12 months of the loan, giving businesses the breathing space they need during this difficult time. In addition, the Government covers the first 12 months of interest payments charged to the business by the lender.

In order to give businesses further support and flexibility in making their repayments, the Chancellor has announced “Pay as You Grow” (PAYG) options. PAYG will give businesses the option to repay their Bounce Back loan over ten years. This will reduce their average monthly repayments on the loan by almost half. Businesses will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months. Given the continued challenges businesses are facing, HM Treasury has opted to make the full repayment holiday available to borrowers from the first repayment, which means that businesses can choose to make no payments on their loans until 18 months after they originally took them out. If borrowers want to take advantage of this option, they should notify their lender when they are contacted about their repayments.

Together, the 12-month payment holiday and interest-free period for borrowers, along with the PAYG options, form a generous part of the Government’s unprecedented support package for businesses to protect jobs - including paying wages through the furlough schemes and self-employed support payments, generous grants, tax deferrals.

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