The Bounce Back Loans Scheme (BBLS) was introduced in March 2020 to help out struggling businesses. This period was the start of the first lockdown and that meant it was also the start of a really tough time for a lot of business owners, particularly those who worked in sectors such as hospitality.
Essentially, they offered a big lump of short-term cash that could have been used to fix some glaring financial concerns or it could have been invested with a view to long-term future planning. This amount of cash varied from £2,000 to £50,000. However, the amount that you could borrow was capped at 25% of your turnover from the previous year, or your estimated turnover.
Businesses that hadn’t already borrowed the full amount could also “top-up” their initial loan. The minimum amount that you could add onto the initial loan was £1,000.
Bounce Back Loans were completely backed by the state and required no repayments or interest within the first 12 months. After 12 months, banks charge a fixed 2.5% annual interest on top of their initial loan.
The BBLS has given out £46-billion since it came into action, helping millions of people in a time of crisis.
What is Pay as You Grow (PAYG)?
The BBLS works with another governmental scheme, amusingly called Pay as You Grow (PAYG): a scheme designed to help borrowers with their repayments.
You can have that if you don’t make repayments extended to 18 months but banks will still start charging interest after 12 months anyway, so this option is really only for people in a bad financial difficulty.
These loans can last for up to 10 years with a fixed 2.5% interest rate annually, after that first year. The reason for this was to cut monthly repayments by almost half of what they could have been, allowing borrowers a more sustainable way of making their repayments.
Statistics in April showed that more than 1.5 million UK businesses benefited with the bounce back loan as they looked to counter their financial struggles.
If you want more information on this topic then have a look at our Bounce Back Loan page. We can come to your aid if you are having troubles with your Bounce Back Loan. Please get in touch with us at 0800 088 2142.