The Treasury said borrowers of Bounce Back Loans can tailor repayments to their individual circumstances with an option to delay all repayments for a further six months.
Kate Nicholls, chief executive of UKHospitality welcomed the announcement and said the additional flexibility would “give valuable breathing space” for many operators.
Operators can choose to make no payments on their loans until 18 months after they originally took them out.
Borrowers will be able to extend the length of their loans from six to 10 years and make interest-only payments for six months.
Options for businesses
Under the Pay as You Grow repayment flexibilities, businesses now have the option to pause repayments from their first repayment, rather than after six repayments have been made.
Lenders will contact borrowers with information on repayment schedules and accessing flexible options from today (Monday 8 February).
UKH’s Nicholls added: “The overwhelming majority are under huge pressure after months of little or no income, with cash fast running out and an ever-increasing debt pile as a result of prolonged periods of closure.”
Banks must be as flexible as possible in allowing hospitality operators to access better terms and follow through with the Chancellor’s announcement, she added.
Borrowers should only expect correspondence from lenders three months before their first repayments are due.
Businesses will be provided with three options:
- Extend the length of the loan from six years to 10
- Make interest-only payments for six months, with the option to use this up to three times throughout the loan
- Pause repayments entirely for up to six months
More than 1.4m businesses collectively took out nearly £45bn through the Bounce Back Loan Scheme, according to the Treasury.
Further support measures are urgently needed to help the sector as the “nation’s economic recovery hangs in the balance,” Nicholls said.
She said: “What’s urgently required is a clear roadmap to reopening, a solution to the ongoing rent debt issue that continues to cast a huge shadow over the sector, along with an extension of the business rates holiday and VAT cut.”