Can’t afford Bounce Back Loan Monthly Payments

So your first payment is due – or has even been taken.

That crept up fast.

Maybe a few months payments have already left a dwindling account.

Or perhaps you are already in default.

Approximately 1.5 million Bounce Back Loans were issued and the majority were taken out in the first 3 months of the scheme.

So you’re in the same boat as about a million company directors.

But with Covid still here, what’s genuinely surprised me is how many directors are unaware of the Pay As You Grow (PAYG) September 2020 update, which was designed specifically to help those businesses that would find making the full monthly payments right now, a crippling burden and smooth a way back to profitability.

Pay As You Grow (PAYG) options to Bounce Back Loan Scheme

N.B. This is not financial advice – it’s just making you aware of the options.

Before your repayments commence or AT ANY STAGE during the loan you can consider:

·        Taking a repayment holiday for up to six months. This option is available once during the term of their Bounce Back Loan.

·        Requesting an extension of their loan term to 10 years from six years, at the same fixed interest rate of 2.5%

·        Reducing monthly repayments for six months by paying interest only. This option is available up to three times during the term of their Bounce Back Loan.

You can use these options individually or in combination with each other.

Borrowers should be aware that they will pay more interest overall if they use one or more of these options, and that the length of the loan will increase in line with any repayment holidays taken.

For further information

Like many, I had hoped we would have returned to “normal” within a few months of the first lockdown.

And certainly by now.

But if you need an extra 6 months breathing space – it’s there.

18 months interest only payments – it’s there.

Lengthen the term – it’s there.

Combine all 3 – Knock yourself out.

From speaking with others, you can access these options pretty simply banking online or by phone in most cases as long as you are still trading.

The average loan size was around 30K and I know there are a lot of 50k loans out there.

So if you are finding these monthly payments a drain on cashflow currently or in the next few years, you do have these options to weather the storm a little longer if you want to.