Small businesses are to be given more time repay bounce back loans taken out to help during the pandemic.

The initial repayment period was six years (with no interest charges in the first 12 months) but there will now be the option to extend to a 10 year repayment period. The change in policy has been dubbed ‘pay as you grow’. The Chancellor uses less flowery language, explaining the change gives businesses ‘breathing space to get back on their feet’.

About £45bn has been borrowed by more than 1.4 million small businesses. The payment extension is in response to a fear that £ billions will go unpaid if companies go under in the immediate aftermath of the pandemic and longer payment periods reduce the monthly repayment charges.
Under the new arrangements, announced Friday 5 February, businesses will have the options of:
  • Extending the length of the loan from six years to 10
  • Making interest-only payments for six months, with the option to use this up to three times throughout the loan
  • Pausing repayments entirely for up to six months
If you have a questions about Coronavirus loans or the changes to the repayment arrangement, email Jason McClounan