Pay As You Grow for Bounce Back Loans

Announced by the Government in September 2020, Pay As You Grow (PAYG) options were launched for Bounce Back borrowers to help businesses get back to regular trading. There are several options and here we explore the support available for businesses who require it. 

Please note, the options provided here are only available for businesses that have loans through the Bounce Back Loan Scheme. If you have a Coronavirus Business Interruption Loan and are worried about your upcoming repayment(s), you can find more information here. 

What options are available for repaying my Bounce Back loan?

Under PAYG, you are able to:

• Reduce your monthly payments for six months by paying interest only. This option is  available up to three times during the term of your loan
• Take a payment holiday for up to 6 months. This option is available once during the term of your loan
• Request an extension of your loan term from 6 years to 10 years, at the same fixed interest rate of 2.5%

You’re able to use the above options individually or in combination with one another, however, you cannot exceed a 10 year term loan. You should also be aware that you will pay more interest overall if you use one or more of these options. The length of your loan may increase in line with any payment holidays taken.

It’s also important to remember that, should you use the above options, your business still remains fully liable for all repayments and if you are unable to meet these obligations, it could negatively impact your credit score.

The British Business Bank has also created an infographic below to help you better understand these options:

Will using PAYG affect my ability to obtain finance in future?

Using PAYG should not, in principle, affect your ability to obtain finance in future. It’s designed to alleviate financial difficulty before it arises by providing you with flexibility in meeting your repayment obligations. It won’t affect your credit score, or negatively affect your credit file, but it may affect providers’ future creditworthiness assessments.

For example, when considering a request for additional funding, a provider will take into consideration incoming and outgoings, including existing debt repayments such as your Bounce Back loan. They may also consider your business’ total debt exposure, which will also include your outstanding Bounce Back loan.

If you have concerns regarding repaying your loan, you should contact us directly.

Further resources from the British Business Bank

The British Business Bank has created a range of guidance and resources which are available to all businesses. It includes content around managing your cashflow, as well as a list of independent advice services.

For more information, visit their Finance Hub here.

I have a CBILS loan. What options are available?

If you have a loan under the CBILS scheme and you’re worried about your upcoming repayment(s), it’s important that you contact us as soon as possible to discuss your options. You can call us on 0203 966 1191 or email us at customersolutions@fundingcircle.com.