Huge relief for Bounce Back Loan borrowers
The chancellor will tomorrow (Monday 8th February) detail plans to reduce the pressure on borrowers under the Bounce Back Loan scheme by extending the terms for repayment.
The government have drawn up plans to "repay as you grow", with key changes being:
Options to extend the term of the loan from 6 to 10 years, meaning a reduction in monthly payments
Options for 6-month interest-only, or payment holiday periods
Early borrowers under the scheme last year will have their 12-month interest-free period expire in May 2021, so these announcements will come as welcome relief to businesses to find their feet after a challenging year.
An extension from a 6-year loan to a 10-year loan for a borrower at the maximum level will reduce repayments from £887 to £447. However, business owners should be mindful of the increased borrowing costs caused by the extension.
Banks are expected to start contacting customers with details of the options as the the details are fully released.
The loan scheme is due to close on 31st March, but the chancellor is being encouraged in some quarters to keep the scheme open as the economy continues to struggle. However, the Bank of England warned this week that as many as half of all debts under the scheme could go bad, with the taxpayer to foot the bill with loans being government-backed.
If cashflow is a key concern for your business, get in touch with us at Price Accounting. Our resources and expertise can help guide you through this challenging period.