Bounce Back Loan repayments needn’t spell disaster. If you’re not ready to pay, here are your options.

At the end of March this year, the government’s Bounce Back Loan Scheme (BBLS) came to an end. The scheme was launched to help out those businesses whose operations had been interrupted by the Covid-19 pandemic, and it was embraced by many, shelling out a whopping £46.5 billion to 1.5 million businesses.

The BBLS offered support and comfort to those who desperately needed cashflow – with repayments being delayed until better times. However, this repayment holiday is now coming to an end and if you took advantage of a Bounce Back Loan, you may have been notified that repayments are due to commence imminently.

Does this mean that those much-looked-for better times are here? We’re seeing that our clients are recovering at different rates. Some practices have truly bounced back, enjoying the results of pent up demand and experiencing record turnover levels since reopening. For others, it’s been a harder slog as they’ve had – and continue to have – difficult cashflow management decisions to make.

Pay as You Grow

Thankfully, the government also recognises that each business and sector is different, and last year announced Pay as you Grow options. These options allow businesses to extend loan terms, reduce repayments, or even take repayment holidays.

If you’re still struggling, there are three options. Borrowers can use these options individually or in combination.

• Request an extension of the loan term to 10 years at the same fixed rate of interest. This will obviously reduce the ongoing monthly commitment, but will mean the business incurs higher interest charges as the term of the loan is longer.
• Reduce your monthly repayments for six months by paying interest only. This option is available up to three times during the term of your Bounce Back Loan.
• Take a payment holiday for six months. This means that your total repayment figure will go up, as you’re accruing interest, but you’ll make no payments for a six-month period. This option is available once during the term of your Bounce Back Loan.

Lenders will inform their customers about Pay as You Grow directly, and will advise you about how your repayment options may change according to your choices under the scheme. Borrowers remain responsible for repaying their Bounce Back Loan and are fully liable for the debt.

Understand your outgoings

Before you dive in, an important question to ask is whether you know what your business can afford to pay, and if there is any benefit to utilising Pay as you Grow.

While the pace at which businesses have recovered has varied within our client base, one thing has been consistently obvious. The running of businesses has changed: factors like staffing structures, the ability to utilise surgery space, and demand for high-end treatments have all impacted that magic profit figure. Perhaps this is intentional, or perhaps it’s happened organically – regardless, we’re seeing that as times have changed, the business model has changed with it.

The common theme among practices that are thriving post-Covid is that they understood their numbers and their model in the first place. They were able to pivot through recent chaos, making informed decisions, analysing the results and adapting their future actions.

If you need help considering whether any of the Pay as You Grow options could work for you, we’re here to advise. Better still, we’ll also take a wider view of your financial agility to identify where you might be able to make significant regular savings. Even if you took out the maximum £50k Bounce Back Loan, your repayment will be no more than £950 per month – and while this is not an insignificant amount, in my experience it’s all too common for clients to have needlessly paid more than this in tax before we started working with them.

We’re ready and waiting to help you maximise your hard-earned cash; all you have to do is make the first step. For a chat about your options, get in touch.