Businesses that took out government-backed Bounce Back Loans to get through Covid-19 will now have further six months to repay their loans.
Pay as You Grow will be available to over 1.4 million businesses, which collectively took out nearly £45bn through the scheme.
The chancellor’s Pay as You Grow repayment flexibilities now include the option to delay all repayments for a further meaning businesses can choose to make no payments on their loans until 18 months after they originally took them out.
The option to pause repayments will now be available to all from their first repayment, rather than after six repayments have been made.
The scheme will also enable borrowers to extend the length of their loans from six to 10 years (reducing monthly repayments by almost half) and make “interest-only payments” for six months, in order to tailor their repayment schedule to suit their individual circumstances.
This is in addition to the government covering the costs of interest for the first year of the loan.
Sunak, said: “Businesses are continuing to feel the impact of extended disruption from Covid-19, and we’re determined to give them the backing and confidence they need to get through the pandemic.
“That’s why we’re giving Bounce Back Loan borrowers breathing space to get back on their feet, through greater flexibility and time to repay their loans on their terms.”
Business Secretary, Kwasi Kwarteng, added that the “comprehensive and generous” financial support package delivered across the UK has “protected” jobs, saved businesses and kept local economies on the move.
He said: “These 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.”