UK business groups give backing to Bounce Back Loans repayment extension
The UK’s largest business advocacy groups have backed Rishi Sunak’s move to offer more generous repayment terms on £45bn of emergency Covid Bounce Back Loans.
The Treasury announced yesterday that the 1.4m businesses who have taken out a Bounce Back Loan will be able to pay it back over ten years instead of six, make interest-only payments for six months or pause repayments for up to six months.
The commercial loans, which gives businesses access to loans up to £50,000 by British banks, were launched in May last year and see the government take on 100 per cent of the risk if the borrower defaults.
CBI financial services director said the new terms will “provide vital support to many businesses who hope to move from survival to recovery mode”.
Federation of Small Businesses national vice chair Martin McTague also threw his support behind the new scheme, which has been labelled “pay as you grow”.
“Ultimately, bounce back facilities have been made possible by the Government as part of efforts to see us through a national crisis,” he said.
“Lenders must be mindful of this fact, and treat borrowers accordingly over the months ahead.”
British Chambers of Commerce director general Adam Marshall added: “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.”
The new terms of repayment were brought in, after warnings from the Bank of England that half of the £45bn in Bounce Back borrowing was at risk of defaulting.
Liberis, an SME finance provider, predicts pay as you grow could halve the number of defaults on Bounce Back Loans.