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Pay As You Grow - Bounce Back Loan Scheme (BBLS)

Options to manage your Bounce Back Loan repayments

The Government has announced Pay As You Grow options for Bounce Back Loan borrowers to help businesses get back to regular trading.

For the first year of your loan, you have a payment holiday and the Government pays the interest via a Business Interruption Payment. After the first year, you will need to start making monthly repayments to repay the amount you borrowed, plus interest from the date your repayment holiday ends.

Pay As You Grow options are designed to give you more time and flexibility to pay back your loan and will be available to you when you are due to make your first payment once the initial 12 month period ends. These options are available throughout the course of your loan term either individually or you can combine the payment holiday options with the option to extend the term of your loan.

What are Pay as You Grow options?

If you expect to be in a better position to repay in the future, there are two payment holiday options you can consider.

Option 1a: Interest Only Payments for 6 months

Features
  • You could reduce your monthly repayments for six months by paying interest only.
  • This option can be used up to three times during the term of your loan and can be used back-to-back i.e. for up to 18 months straight (in 3 standalone transactions of 6 months at a time)
Things to consider
  • You can choose to extend the term of the loan by the duration of the interest only period (i.e. 6 months at a time) assuming this does not extend the total term of the loan beyond ten years.
  • If you choose to make use of this option without extending the term of your loan, you will repay the outstanding balance in larger instalments when you start making repayments again.
  • Whether you extend the term of your loan or not, the total amount you owe will go up. This is because your interest costs increase as a larger amount of your loan is outstanding for longer/you’re repaying your loan over a longer period.

To help you understand what this option might mean for you, here are two illustrative examples. The first outlines the impact of using this option once with no change to the term of your loan and the second outlines the impact of using this option in conjunction with extending the term of your loan to the maximum of ten years.

BBL- 6-year term with 6-month interest only period*
Loan Value (Capital) Capital Instalments Final Capital Instalment Total Interest Paid Over the Term Total Capital and Interest Payable
£35,000 53 x £648.14 £648.58 £2,446.35 £37,446.35
BBL – Term extension to 10 years with 6-month interest only period*
Loan Value (Capital) Capital Instalments Final Capital Instalment Total Interest Paid Over the Term Total Capital and Interest Payable
£35,000 101 x £343.13 £343.87 £4,197.80 £39,197.80

*These illustrative examples are indicative, and payments may differ depending on the date the loan is drawn down and/or capital/ capital & interest holiday applied. Remember you will still be required to make interest payments during the interest only period.

Option 1b: Payment Holiday for 6 months

Features
  • You can choose to pause payments (both capital and interest) on your Bounce Back Loan for a period of 6 months
  • This option is available once during the term of your Bounce Back Loan
  • You may use this option back to back with the interest only option (Option 1a)
Things to consider
  • You can choose to extend the term of the loan by the duration of the payment holiday (6 months) assuming this does not extend the total term of the loan beyond ten years.
  • If you choose to make use of this option without extending the term of your loan, you will repay the outstanding balance in larger instalments when you start making repayments again.
  • Whether you extend the term of your loan or not, you’ll accrue more interest, so the total amount repayable would increase, unless you repay early.

To help you understand what this option might mean for you, here are two illustrative examples. The first outlines the impact of using this option once with no change to the term of your loan and the second outlines the impact of using this option in conjunction with extending the term of your loan to the maximum of ten years.

BBL- 6-year term with 6-month payment holiday*
Loan Value (Capital) Capital Instalments Final Capital Instalment Total Interest Paid Over the Term Total Capital and Interest Payable
£35,000 53 x £655.50 £655.96 £2,471.45 £37,471.45
BBL- Term extension to 10 years with 6-month payment holiday*
Loan Value (Capital) Capital Instalments Final Capital Instalment Total Interest Paid Over the Term Total Capital and Interest Payable
£35,000 101 x £347.03 £347.43 £4,242.75 £39,242.75

*These illustrative examples are indicative, and payments may differ depending on the date the loan is drawn down and/or capital/ capital & interest holiday applied.

If you’re only able to repay a smaller amount each month, you have the option to extend the term of your loan.

Option 2: Term Extension to 10 years

  • You can request an extension of your loan term from six years to 10 years at the same interest rate of 2.5%.
  • Your monthly repayments will reduce, however the total amount you owe will increase. This is because your interest costs increase as you’re repaying your loan over a longer period.
  • If you’re considering this option you should think carefully about your ability to repay over a longer timeframe. For example, if you intend to cease trading or retire within the revised term of your Bounce Back Loan.

To help you understand what this option might mean for you, here’s an illustrative example.

BBL- Term extension to 10 years*
Loan Value (Capital) Capital Instalments Final Capital Instalment Total Interest Paid Over the Term Total Capital and Interest Payable
£35,000 107 x £324.07 £324.51 £3,978.86 £38,978.86

*These illustrative examples are indicative, and payments may differ depending on the date the loan is drawn down and/or capital/ capital & interest holiday applied.

Apply for PAYG Options

You can apply for PAYG options any time if you’ve already started making repayments or if your first payment is due in the next three months.

If your next repayment is due in the next five working days, please wait until you’ve made this payment before applying for a PAYG option.

Make sure you have your Bounce Back Loan reference number and the date of your first capital repayment to hand before you get started. You can find this information in your loan documentation – we emailed this to you when you received your Bounce Back Loan.

Apply online (opens in a new window)

British Business Bank

Managed by the British Business Bank on behalf of, and with the financial backing of, the Secretary of State for Business, Energy & Industrial Strategy. British Business Bank plc is a development bank wholly owned by HM Government. It is not authorised or regulated by the PRA or the FCA. Visit www.british-business-bank.co.uk/BBLS

Coronavirus support: FAQs for businesses

We understand you might be worried about the financial impact of coronavirus on your business and we’re here to help.

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