Check options as loan repayments become due

BUSINESSES are being urged to check their options as the first repayments become due on the coronavirus support loans that they took more than a year ago.

Payments will be due this week for many of the early adopters of the UK Government’s Bounce Back Loans, which launched in May last year.

Companies were given 12 months where the Government picked up the 2.5% interest charged on the loans of up to £50,000.

However now, 13 months later, some firms will be due to start making payments to their lenders.

Richard Bearman, the managing director for small business lending at the British Business Bank, which has been overseeing the scheme, said that businesses should check what options they have.

“The Bounce Back Loan Pay As You Grow scheme offers flexibility to borrowers in managing their repayments more effectively, and businesses may access its features, such as increasing term length and reducing monthly payments, throughout the term of their loans,” he said.

“We encourage borrowers to contact lenders early in the three months leading up to their first repayment if these options are of immediate interest.”

The available options include extending the loan period from six to 10 years, pausing interest payments and loan repayments for one sixmonth period and paying only interest for three six-month periods.

More than £46.5bn was lent by UK banks to small businesses needing support during the pandemic.