Businesses are urged to check their options when first repayments become due on coronavirus support loans they took out more than a year ago.
Payments will be due this week for many of the early adopters of the government rebound loans, which were launched in May of last year.
Companies had 12 months during which the government recovered the 2.5% interest charged on loans of up to Â£ 50,000.
However, 13 months later, some businesses will have to start making payments to their lenders.
Richard Bearman, managing director of small business loans at the British Business Bank – which oversees the program, said businesses should check out the options they have.
âThe Bounce Back Loan Pay As You Grow program provides flexibility for borrowers to manage their repayments more effectively, and businesses can access its features, such as increasing the term length and reducing monthly payments, all through. over the life of their loans, âhe said.
“We encourage borrowers to contact lenders early in the three months before their first repayment if these options are of immediate interest.”
The options available include extending the loan period from six to 10 years, suspending interest payments and loan repayments for a six-month period, and paying interest only for three six-month periods.
More than Â£ 46.5 billion has been loaned by UK banks to small businesses in need of support during the Covid-19 pandemic.
Almost 700,000 businesses jumped early and took out loans in the first month of its launch last May. Many of these companies will now have to repay in the coming weeks.
A survey released earlier this week showed that about 22% of small businesses aim to pay off the loan in full within the next 12 months. However, 15% said it would take them a full decade to repay – the maximum allowed under the government-backed program.
About one in 100 said they never expected to repay loans.
Official data on repayments has not yet been collected, but over time, as payments start to arrive, the government will have a better idea of ââhow much will be repaid.
If one of the 1.5 million businesses that took out a bounce loan does not pay it back, the government has promised to pay back the lenders. Some fear it could run into tens of billions of pounds.