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
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleESRB Recommends Reciprocation of Certain Macro-Prudential Measures
The European Commission (EC) published three Delegated Regulations (2021/2153, 2021/2154, and 2021/2155) to supplement the Investment Firms Directive (IFD or Directive 2019/2034).
The Financial Stability Board (FSB) published a report that presents results of the sixth non-bank financial intermediation monitoring exercise in the Americas.
The Bank for International Settlements (BIS) published the December issue of the Quarterly Review, which analyzes the non-bank financial intermediation mechanisms that could undermine financial stability.
The Bank of England (BoE) opened the Alternative Liquidity Facility, or ALF, for deposits from the participating UK-based Islamic banks for the first time.
APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).
The European Banking Authority (EBA) launched three consultations on technical aspects of the revised framework capturing interest rate risks for banking book (IRRBB) positions, with the comment period ending on April 04, 2022.
The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).
The European Banking Authority (EBA) published the sample of banks for the mandatory Basel III monitoring exercise, which will refer to the December 2021 data.
The Board of Governors of the Federal Reserve System (FED) is adopting a proposal to revise and extend for three years the Complex Institution Liquidity Monitoring Report (FR 2052a) for banks.
The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.