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
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