Pay-as-you-grow bounce back loans

Pay as You Grow repayments for Bounce Back Loans

Authored by Kelly Burton

Kelly Burton

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Approximate read time: 2 minutes

Chancellor Rishi Sunak recently announced the ‘Pay as You Grow’ (PAYG) initiative, aimed at helping businesses with Bounce Back Loans repay over a longer period and at an affordable rate.

What is ‘Pay as You Grow’?

Since the Bounce Back Loan Scheme’s (BBLS) inception, more than 1.4 million businesses borrowed nearly £45 million through the scheme. Pay as You Grow (PAYG) refers to the increased flexibility in repayment options for businesses who’ve taken out a loan via the scheme.

Bounce Back Loan repayments were due to start in May, but PAYG means:

  • Businesses can choose to make interest-only payments for six months, which they can choose to do up to three times in the loan’s duration.
  • Businesses can delay all payments for a further six months, or eighteen months after the original loan was taken out.
  • Payments can be paused from the first instalment, rather than after six as was initially proposed.

All lenders are expected to offer their borrowers PAYG, and your lender should outline your policy’s specific repayment options. This added flexibility means the loans’ durations can be extended from six years to ten.

The changes were initially announced in September 2020 and reiterated by the Chancellor on February 8th, 2021.

With the Government’s current coronavirus support schemes, including the BBLS, the Coronavirus Business Interruption Loan Scheme (CBILS) and Furlough (Coronavirus Job Support Scheme) set to end in April, Pay as You Grow’s flexibility could offer another lifeline to businesses still struggling with debt caused by the pandemic.

The Chancellor stated:

“Businesses are continuing to feel the impact of extended disruption from Covid-19, and we’re determined to give them the backing and confidence they need to get through the pandemic.

“That’s why we’re giving Bounce Back Loan borrowers breathing space to get back on their feet, through greater flexibility and time to repay their loans on their terms.”


Pay as You Grow (PAYG) adds flexibility to the repayment of Bounce Back Loans. More than 1.4 million businesses have benefitted from almost £45 million from the Bounce Back Loan Scheme (BBLS). However, they may still face financial hardships as the Government ends its various support schemes. It’s hoped that the added flexibility will enable businesses to repay their loans at a rate affordable to them.

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