HM Treasury Allows Extended Repayment Delay Under COVID Loan Scheme
HM Treasury announced that borrowers that avail the government-backed Bounce Back Loan Scheme, or BBLS, to get through the COVID-19 crisis will now have the option to tailor repayments according to their individual circumstances. HM Treasury highlighted that the "Pay as You Grow" repayment flexibilities now include the option to delay all repayments for a further six months; this means that businesses can choose to make no payments on their loans until 18 months after they originally took the loans. The option to pause repayments will now be available to all from their first repayment, rather than after six repayments have been made.
Pay as You Grow will also enable borrowers to extend the length of their loans from six to ten years and make interest-only payments for six months, to tailor their repayment schedule to suit their individual circumstances. These Pay as You Grow options will be available to more than 1.4 million businesses that took nearly GBP 45 billion through the Bounce Back Loan Scheme. This is in addition to the government covering the costs of interest for the first year of the loan. Lenders will proactively and directly inform the customers of Pay as You Grow, though borrowers should only expect correspondence three months before the first repayments are due. The government has made clear that lenders are expected to offer Pay as You Grow options to all borrowers under the Bounce Back Loan Scheme. Moreover, the conduct rules of FCA require lenders to show due consideration and appropriate forbearance to borrowers in difficulty.
Related Link: News Release
Keywords: Europe, UK, Banking, COVID-19, BBLS, Bounce Back Loan Scheme, Credit Risk, Pay as You Grow, Loan Repayment, HM Treasury
Featured Experts
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous Article
ESRB Recommends Reciprocation of Certain Macro-Prudential MeasuresNext Article
RBNZ to Reinstate Loan-to-Value Ratio RestrictionsRelated Articles
APRA Finalizes Reporting Standard for Operational Risk Requirements
APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.
ECB Publishes Guide for Determining Penalties for Regulatory Breaches
ECB published a guide that outlines the principles and methods for calculating the penalties for regulatory breaches of prudential requirements by banks.
MAS Sets Out Good Practices to Manage Operational Risks Amid COVID
MAS and The Association of Banks in Singapore (ABS) jointly issued a paper that sets out good practices for the management of operational and other risks stemming from new work arrangements adopted by financial institutions amid the COVID-19 pandemic.
ACPR Announces New Data Collection Application for Banks and Insurers
ACPR announced that a new data collection application, called DLPP (Datalake for Prudential), for collecting banking and insurance prudential data will go into production on April 12, 2021.
BCB Maintains CCyB at 0%, Initiates First Cycle of Regulatory Sandbox
BCB announced that the Financial Stability Committee decided to maintain the countercyclical capital buffer (CCyB) for Brazil at 0%, at least until the end of 2021.
EBA Consults on Pillar 3 Disclosure Standards for ESG Risks Under CRR
EBA is consulting on the implementing technical standards for Pillar 3 disclosures on environmental, social, and governance (ESG) risks, as set out in requirements under Article 449a of the Capital Requirements Regulation (CRR).
ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting
ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting
EIOPA Launches Study on Non-Life Underwriting Risk in Internal Models
EIOPA has launched a European-wide comparative study on non-life underwriting risk in internal models, also kicking-off of the data collection phase.
SRB Publishes Overview of Resolution Tools Available in Banking Union
SRB published an overview of the resolution tools available in the Banking Union and their impact on a bank’s ability to maintain continuity of access to financial market infrastructure services in resolution.
EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.
