What is the Pay as You Grow scheme?
Following last week’s government budget announcement, we wanted to remind you about the Pay As You Grow scheme. The initiative offers bounce back loan borrowers an extended and flexible repayment schedule depending on their circumstances. It should help businesses in their post-covid recovery.
The government will also be covering any interest on loans for the first year after they are taken out.
Under the Pay as You Grow scheme, borrows can:
- Extend the length of the loan repayment schedule from six to ten years. This extension could reduce monthly repayments by up to 50%
- Make interest-only payments for six months at a time. This allowance can be used up to three times throughout the loan repayment term.
- Pause repayments all together for up to six months. This option is now available to all and is available from their first repayment, rather than after six repayments are made which was previously the case. This means that businesses can opt out of making repayments on their bounce back loans until 18 months after they were originally taken out.
Borrowers can use these options individually or in combination with each other.
Lenders should begin contacting their borrowers 3 months before repayments are due to begin.
Have you heard from yours yet?
Hear what the CBHC team think:
With the Pay as You Grow scheme, the government have provided an extremely favourable interest rate without the requirement for personal guarantees from directors. In most cases therefore our advice is to extend the loan to the maximum repayment period. If you’d like any further guidance, please contact your account manager.