New Pay As You Grow service to boost support for UK SMBs, says British Business Bank

By Megha Bhattacharya

The British Business Bank has announced further details of Pay As You Grow, which helps UK smaller businesses that have taken out a COVID-19 emergency Bounce Back Loan to manage their cashflow and have a better chance of getting back to growth.

Pay As You Grow (PAYG) is expected to allow businesses who have started repaying their Bounce Back Loans to request an extension of their loan term to 10 years from six years, at the same fixed interest rate of 2.5% reduce their monthly repayments for six months by paying interest only. This option is available up to three times during the term of their Bounce Back Loan take a repayment holiday for up to six months. This option is available once during the term of their Bounce Back Loan.

Richard Bearman, Managing Director, Small Business Lending, British Business Bank, said, “Pay As You Grow will provide tangible benefits to Bounce Back Loan recipients, many of whom may have accessed the Bounce Back Loan Scheme to borrow money for their business for the first time. The scheme offers greater flexibility to businesses who may need flexibility in paying off their Bounce Back Loan and enables them to manage their repayments more effectively.”

According to the Bank, lenders will start to communicate PAYG options to Bounce Back Loan Scheme borrowers three months before repayments commence.

Launched in May 2020, the Bounce Back Loan Scheme offers financial support to businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 pandemic.

Dr Adam Marshall, Director General of the British Chambers of Commerce, said, “The Bounce Back loan scheme has been an important lifeline for many small businesses during the pandemic. With many businesses still facing diminished cashflow, the flexibility provided by Pay As You Grow has a crucial role to play in providing firms who have received a Bounce Back Loan with much-needed headroom to manage their repayments through this continued economic storm. Chambers of Commerce across the country will ensure that businesses in their local communities are aware of the Pay As You Grow scheme.”