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Bounce Back Loan Scheme: Employee Ownership

Question for Department for Business, Energy and Industrial Strategy

UIN HL2557, tabled on 8 September 2021

To ask Her Majesty's Government what plans they have to give struggling companies the option to convert emergency bounce back loans into Employee Ownership Trusts to support their post-pandemic recovery process.

Answered on

23 September 2021

The Government launched the Bounce Back Loan Scheme (BBLS) to ensure that the UK’s smallest businesses could access loans of up to £50,000 to help businesses through the pandemic. Under BBLS, no repayments are due from the borrower for the first 12 months of the loan. The Government also covers the first 12 months of interest payments charged to the business by the lender.

We have always been clear that businesses are responsible for repaying any finance they take out. However, we recognise that a diverse range of businesses have taken out Bounce Back Loans and some of these will benefit from more flexibility in making their repayments. That is why the Government introduced the “Pay as You Grow” measures, which allow borrowers to tailor their repayments to their individual circumstances. “Pay as You Grow” provides borrowers with the option to:

  • Extend the length of their loan from six years ten
  • Make interest-only payments for six months, with the option to use this up to three times throughout the loan
  • Pause repayments entirely for up to six months

Borrowers can use these options either individually or in combination with each other. In addition, they have the option to fully repay their loan early and will face no early repayment charges for doing so.

The Government is not currently considering proposals to convert outstanding Bounce Back Loans into equity.