• Foxmain Associates

How "Pay As You Grow" can provide flexibility with Bounce Back Loan repayments due to start soon


The UK Government accounced Pay As You Grow (PAYG) options for Bounce Back Loan borrowers in September 2020, giving the borrower the flexibility and more time to pay their Bounce Back Loan should they need it.


Under the Bounce Back Loan Scheme, no repayments or interest is due from the borrower during the first 12 months of the loan term.


Repayments are due to start from May for many businesses that took out loans straight away, but they will now be able to apply for interest-only payments or payment holidays for up to six months.


Lenders will start to communicate PAYG options to Bounce Back Loan Scheme borrowers three months before repayments commence.


Lenders will inform their customers about PAYG directly, so borrowers should wait until they are contacted by their lender before enquiring about the scheme. Lenders will advices customers about how their payment profiles may change according to their chouces under the scheme.


PAYG will provide optons to borrowers, including: -

  • Requesting and extension of their loan term to 10 years from 6 years, at the same fixed interest rate of 2.5% per annum;

  • Reducing their 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;

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

Borrowers 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 more information on PAYG and BBLS, visit Bounce Back Loan Scheme (BBLS) – Pay As You Grow - British Business Bank (british-business-bank.co.uk)