New flexible repayment options for businesses due to pay back government-backed Bounce Back Loans have been welcomed by MP Bob Seely.
The new arrangements, set out by Chancellor of the Exchequer, Rishi Sunak, today (February 8) mean Bounce Back Loan borrowers will now have the option to tailor payments according to their individual circumstances, extend the length of their loans from six to ten years, make interest-only payments for six months or pause repayments for up to six months.
Under the Bounce Back Loan Scheme, no repayments or interest are due from the borrower during the first 12 months of the loan term. Under new arrangements, this means businesses can now choose to make no payments on their loans until 18 months after they originally took them out. This is in addition to the government covering the costs of interest for the first year of the loan.
Business Secretary, Kwasi Kwarteng, said: “The comprehensive and generous financial support package we have delivered across the UK has protected jobs, saved businesses and kept local economies on the move.
“While our vaccine rollout is moving at an incredible pace and the end is in sight, we know times are still tough for many companies and extra support is needed.
“These flexible repayment options will give businesses the time they need to recover from the pandemic before paying back loans, giving them the breathing space and confidence to build back better.”
Mr Seely said: “Greater flexibility over payback arrangements is something that I, and others, have been pushing the Treasury and the rest of government for, and I am pleased that the government has listened. We have many small businesses on the Island that will benefit.
“We need to trade our way out of this situation which means supporting businesses to not only survive, but also to grow. The government must do all it can to continue to protect jobs and livelihoods and ensure our country prospers into the future.
“That’s why I am continuing to press the government, at every opportunity, for an extension to the current 5% VAT rate for tourism and hospitality businesses beyond 31 March. Now is not the time to let up on support.”
The government has made clear that lenders are expected to offer Pay as You Grow options to all borrowers under the Bounce Back Loan Scheme. Lenders will proactively and directly inform their customers of Pay as You Grow, and borrowers should only expect correspondence three months before their first repayments are due.
Mr Seely added: “I would like to take the opportunity to remind businesses about all the government grants currently available to them.”
Further details can be found here: https://www.iow.gov.uk/Council/OtherServices/Public-Health-Coronavirus-COVID-19/Businesses-and-employers