One of the biggest announcements is giving companies the option to extend the length of the loan from six years to ten under an initiative called Pay As You Grow. This should give many a little more breathing room whilst they get back on their feet during 2021.
"This extension was due to fears of many company closures!"
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.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about these changes to your government-backed COVID-19 loan, call me on 01908 774320 and let's see how we can help. Don't forget to stay updated with our daily social media posts on our Facebook page.
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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