The government is to launch a ‘Pay As You Grow’ loan payback scheme to provide flexibility for businesses who took out loans amid the coronavirus crisis.
Speaking to the House of Commons today (September 24), Rishi Sunak, the chancellor of the exchequer, said a “major challenge” of protecting jobs was helping businesses with cash flow.
To support firms with loans to repay, the government is launching a ‘Pay As You Grow’ scheme.
Measures include extending the repayment of the bounce back loans from six to 10 years, nearly halving the average monthly repayment, and allowing struggling businesses to make interest-only payments or suspend payments entirely for up to six months.
More than one million small businesses have received a collective £38bn through the bounce back loan scheme thus far. No business using Pay As You Grow will see their credit rating affected, the chancellor said.
Mr Sunak said the government was also extending the government guarantee on loans taken out through the Coronavirus Business Interruption Loan Schemes.
He said: “More than 60,000 small to medium sized businesses have taken out CBILs. To help them, I will extend the government guarantee on these loans for up to 10 years, making it easier for lenders to give more people more time to repay.”
The government is also extending the deadline on all its loan schemes to the end of November, and starting work on a successor loan plan to begin in January.
Mr Sunak said: “The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery.
“Our approach to the next phase of support must be different to that which came before.
"The primary goal of our economic policy remains unchanged - to support people’s jobs - but the way we achieve that must evolve.”
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