UK government introduces further business loan repayment flexibility

Repayment of government-backed SME Bounce Back Loans could be delayed until 18 months after they were taken out under new flexibility rules.

The UK government is introducing further repayment flexibility for small- and medium-size businesses that took out Bounce Back Loans to help them survive the effects of the pandemic.

The loan scheme was introduced last April, and under it more than 1.4 million UK businesses have taken out loans worth nearly £45 billion in total. It is administered by the British Business Bank.

Under the flexible Pay as You Grow repayment scheme, announced originally in September, businesses will now have the following options:

  • Extend the length of the loan from six to ten years.
  • Make interest-only payments for six months, with the option to use this up to three times throughout the loan.
  • Pause repayments entirely for up to six months. This option is now available to all borrowers under the scheme from their first repayment, rather than after six repayments have been made.

“This will mean that businesses can choose to make no payments on their loans until 18 months after they originally took them out,” the government said.

Without this additional flexibility, under the Bounce Back Loan Scheme repayments or interest would not be due from the borrower during the first 12 months of the loan term.

UK business secretary Kwasi Kwarteng said in a press release that the flexible repayment options “will give businesses the time they need to recover from the pandemic before paying back loans, giving them the breathing space and confidence to build back better”.

Businesses can borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.

The scheme remains open to loan applications until 31 March 2021.

Oliver Rowe ( is an FM magazine senior editor.