Many small businesses across the United Kingdom took out Government-backed COVID-19 loans during the pandemic. Chancellor Rishi Sunak has announced they will get more time to repay them ...
In total, around £45bn has been borrowed by over 1.4 million small businesses using the Bounce Back Loan scheme where these loans were 100% guaranteed by the Government.
Many small businesses will start repaying the money as of May and as the economic recovery is expected to be weak, with many possible restrictions still in place, changes had to be made.
Under these new arrangements, which were announced last Friday, small businesses will be able to:
- Extend the length of the loan from 6 to 10 year, thus reducing their monthly payments
- Make interest-only payments for six months. This can be used three times during the loan term
- Pause repayments entirely for six months
As businesses continue to feel the impact of extended disruption due to the pandemic, the Chancellor is determined to offer whatever support is needed as the economy opens up again.
Banks will start to contact borrowers soon and offer them the options outlined above. Changes to your loan shouldn't affect your credit score, but could affect how your bank offers you additional funding in the future.
In my opinion, this is some very positive news.
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