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Many small businesses will soon be required to begin repaying loans taken out under the government's Bounce Back Loan Scheme (BBLS).
The BBLS helped to support businesses during the coronavirus (COVID-19) pandemic, and permitted firms to apply for a minimum of £2,000, up to a maximum of £50,000, or 25% of business turnover, with the government paying the interest for the first 12 months.
The BBLS closed to new applications and top-up applications on 31 March 2021.
Many businesses have asked banks for more time to repay their BBLS loans. Some of these businesses have opted to extend the loan term from six years to ten years. However, for those firms who have stuck to the original terms, they are required to begin repaying after the 12-month payment holiday.
Businesses can choose to use the government's Pay as You Grow initiative, which gives firms the option to extend the length of their loan from six to ten years; make interest-only payments for six months; or pause repayments entirely for up to six months.
The Federation of Small Businesses (FSB) has urged banks to contact their customers 'in order to make them aware of Pay as You Grow' and how to make best use of it.