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Loans: Repayments

Question for Department for Business, Energy and Industrial Strategy

UIN HL2185, tabled on 19 July 2021

To ask Her Majesty's Government what steps they are taking to allow small businesses flexible government loan repayment plans.

Answered on

29 July 2021

We have always been clear that businesses are responsible for repaying any finance they take out. However, we recognise that some borrowers will benefit from additional flexibility with regards to their repayments. That is why we announced the Pay As You Grow measures last year.

Pay As You Grow is designed to provide Bounce Back Loan borrowers more time and flexibility over their repayments by giving them the option to:

  • Extend the length of the loan from six years to ten.
  • Make interest-only payments for six months, with the option to use this up to three times throughout the loan.
  • Take up a six-month repayment holiday. This option is available once during the term of their loan.

Businesses are able to use these options either individually or in combination with each other. These are only available once a business has started making repayments on the loan. In addition, they have the option to fully repay their loan early and will face no early repayment charges for doing so.

While the Government covers the interest due on Coronavirus Business Interruption Loan Scheme (CBILS) facilities for the first twelve months, repayments of capital are required during this period unless the lender chooses to grant additional forbearance measures.

CBILS lenders are able to extend the repayment period for CBILS facilities where this is needed, to a maximum of 10 years. CBILS term extensions are offered at the discretion of lenders, and for forbearance purposes only.

The British Business Bank has a range of guidance and resources available to all businesses, including content on managing cashflow and a list of independent advice services. Details can be found online at the British Business Bank website.