Businesses have six more months to repay COVID loans

Businesses that have taken on government-backed bounce loans can delay the start of their repayments for an additional six months.

The loan program was announced in April of last year and allowed small businesses to claim up to 25 percent of their turnover, up to a maximum of £ 50,000. Under this program, the Treasury provides a 100 percent guarantee for lenders and covers fees and interest for the first year. Repayments were originally scheduled to begin 12 months after receipt of the loan, to be paid within six years. In September, this was extended by Chancellor Rishi Sunak, allow repayments over 10 years.

Yesterday, Sunak announced that borrowers will now have the option of not repaying their loan until 18 months after originally taking it out. An option to suspend refunds is now also available to all businesses on the first installment of their refunds, rather than after six refunds, as was originally the case.

In October, Construction News reported that construction companies have taken out more emergency loans than any other industry.

Additional loan flexibility, announced yesterday, includes the ability to tailor repayments to suit a company’s individual circumstances, through an initiative called “Pay as You Grow”. This means that the government will cover the interest charges for the first year of the loan and allow borrowers to make interest payments only for the following six months.

Lenders will start contacting businesses today to provide information on repayment schedules and how to access flexible payment options. All companies will be contacted three months before their first repayments are due, the Treasury said.

Sunak said, “Businesses continue to feel the impact of the protracted disruptions from COVID-19, and we are committed to giving them the support and confidence they need to navigate the pandemic. That’s why we’re giving Bounce Back borrowers a break to get back on their feet, with more flexibility and time to pay off their loans on their terms.

Business Secretary Kwasi Kwarteng added, “As the rollout of our vaccine advances at an incredible pace and the end is in sight, we know times are still tough for many companies and that more support is needed. is necessary. These flexible repayment options will give businesses the time they need to recover from the pandemic before repaying loans, giving them the breathing space and confidence to rebuild better. “

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