HM Treasury

Thursday 24 Sep 2020


Through the extension of the government guaranteed loan schemes, and the launch of Pay As You Grow, the Chancellor is supporting all businesses by taking action to relieve the pressure on their finances in the coming months. This will enable them to grow and to support and create jobs.

What are the changes?

  • The Government is extending Bounce Back Loans, Coronavirus Business Interruption Loans, Coronavirus Large Business Interruption Loans and the Future Fund until 30 November.
  • The Chancellor is also launching a new Pay as You Grow system which gives flexibility to businesses in repaying Bounce Back Loans. All borrowers will now have the option to repay their loans over a period of up to 10 years, reducing their average monthly repayments on the average loan by almost half.
  • Businesses will also have the option to move temporarily to interest-only repayments for periods of up to six months, and to pause their repayments entirely for up to six months (after they have made their first six payments)

Who will this help?

  • More than one million businesses have taken out a Bounce Back Loan, with an average loan size of £30,000.
  • These businesses can all benefit from the flexibilities available through Pay As You Grow, helping them to manage their cashflows and protect jobs.

How will it help?

  • A business which took out a £30,000 Bounce Back Loan would see their average monthly repayments fall from £532 to £309 (42% reduction) if they repaid the loan over 10 years rather than six. This will boost their cashflow, enabling them to support and protect jobs.
  • The same business could temporarily reduce their monthly repayments to just £63 if they switched to interest-only payments.
  • Finally, utilising a capital and repayment holiday would reduce monthly repayments to £0, allowing the business a six month period to get back on their feet before resuming repayments.
  • The deadlines for applications for the government-guaranteed loans are also being extended to 30 November, meaning that even more firms can benefit from loans to support their business and jobs.
  • In addition, the deadline for applications under the Future Fund, which provides convertible loans to innovative companies which are facing financing difficulties due to coronavirus, is also being extended to 30 November. This means more of our most innovate businesses can grow and scale up.

How does it compare?

  • This extension brings the application deadline for the UK’s loan guarantee schemes into line with other European countries. Loan schemes in France and Germany – which are subject to the same State Aid rules as the UK - close in December.
  • Germany’s Schnellkredit loans scheme also allows repayments over 10 years, but at a more expensive rate of interest (3%) than BBLS (2.5%).

Scheme Usage to Date

  • More than 1 million Bounce Back Loans with a combined value of more than £38bn have been approved to date.
  • Meanwhile, over 66,000 CBILS loans with a combined value of £15.5bn have been approved to date.
  • For larger businesses, 566 CLBILS loans worth £3.84bn have been approved.
  • Under the Future Fund, over 700 convertible loans worth £720m have been approved.
  • British Business Bank data shows that the proportion of CBILS and Bounce Back Loans awarded closely match the respective share of businesses of each English region and devolved nation.

Contact Information

Kathryn Phillips
Press Officer
HM Treasury
020 7270 1393