The Bounce Back Loan (BBL) scheme was a government-backed loan scheme introduced in 2020 to help small businesses in the UK during the turmoil of the COVID pandemic. In addition to the standard Bounce Back Loan terms, the UK government also introduced the Pay as You Grow (PAYG) options in September 2020. These options give businesses more flexibility in how they repay their Bounce Back Loans.
NOTE: Whilst the Bounce Back Loan scheme is no longer available, the PAYG options can still be used to repay Bounce Back Loans that were taken out before the scheme closed
What was the Bounce Back Loan(BBL) Scheme?
The scheme was open to businesses with a turnover of up to £50 million, and loans of up to £50,000 were available. The interest rate on BBLs was 2.5%, and there were no fees or interest to pay for the first 12 months. After 12 months, the interest rate would increase to 6.3%.
Why was the Pay as You Grow Option Introduced?
The knock-on effect of the pandemic on UK businesses is still being felt today. Recognising that many companies couldn’t bounce back quickly enough to repay their loans, the government introduced the PAYG option to offer greater flexibility at a time when so many people were struggling. PAYG gives you more time and options to pay back your loan.
The PAYG options include:
- Extension of the loan term to 10 years. This can reduce the monthly repayments, but it will also increase the total amount of interest that is paid.
- Capital repayment holiday for up to 6 months. This means that you will only have to pay interest during the holiday period.
- Full repayment holiday for up to 6 months. This means that you will not have to pay any interest or capital during the holiday period. You can do this up to three times.
How to Make Informed Decisions with the Bounce Back Loan Calculator
You can use a Bounce Back Loan calculator to calculate your monthly repayments under the PAYG options. The calculator will ask you to enter how much you borrowed and then ask you to select which PAYG option you want to use.
Here are some tips for using the Bounce Back Loan calculator and the PAYG options to make informed decisions:
- Start by entering the correct amount you borrowed into the calculator.
- Have your current repayment amounts to hand including the monthly repayments, the loan term and the total loan amount.
- Use the calculator to get an estimate of your monthly payments under each of the PAYG options. This will give you a good starting point for deciding which option is the best fit for your business.
- Remember that your actual monthly payments may be higher or lower. This is because the actual interest rate that you are charged may be different from the interest rate that is used in the calculator.
- Talk to your lender or accountant if you have any questions. They can help you to understand the terms of your loan and to make sure that you are making the best decision for your business.
By following these tips, you can use the Bounce Back Loan calculator and the PAYG options to make informed decisions about how to repay your Bounce Back Loan.
Here are some additional things to consider when making your decision:
- Your business’s financial situation: Can you afford the monthly repayments under the PAYG options?
- Your business’s future prospects: Are you confident that your business will be able to repay the loan under the PAYG options?
- The other options available to you: Are there other ways to finance your business that may be more affordable?
It is important to weigh all of these factors carefully before making a decision about how to repay your Bounce Back Loan. By using the Bounce Back Loan calculator and the PAYG options and considering all of your options, you can make the best decision for your business.
Helping You Understand Your Options
The Bounce Back Loan scheme, together with the PAYG options was a valuable source of funding for small businesses. However, it is important to make informed decisions about how to repay your loan. If the money you borrowed is not repaid, your company may be investigated by the Insolvency Service, even if it has been dissolved. By using the Bounce Back Loan calculator and considering all your options, you can make the best decision for your business.
If you are facing problems with your loan repayments, getting professional advice can help you to find a solution. At Simple Liquidation, our team of experts will help you to understand your options and find the best course of action. Please do not hesitate to contact us if you have any questions or would like to speak to one of our experts.