In a bid to help small businesses to get back on their feet from the impact of Coronavirus, the Chancellor has announced that small companies are to get more time to repay bounce back loans.
It has been reported that 1.4 million small firms have borrowed a total of around £45 billion under the Bounce Back Loan Scheme, which offers loans of up to £50,000.
Under the existing bounce back loan scheme, companies can get interest-free loans for the first year. As many will have taken loans out last year, they will need to start repaying them this year when it is predicted the economy may still be weak.
Under a new initiative, businesses will have the option to effectively repay their loans as they regrow from the impact of Coronavirus by:
- Extending the term of their loan from 6 years to 10 years,
- Making interest-only payments for six months, with an added option to use this up to three times throughout the loan
- Pausing repayments entirely for up to six months
It is expected that respective lenders will be contacting those companies who have borrowed under the Bounce Back Loan Scheme this week to discuss the options available to them.
The Bounce Back Loan scheme is still open for applications but will close on 31 March 2021.
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