Post sponsored by Purple Lime
It has been a tough year for all of us. The pandemic brought many challenges, as well as the obvious healthcare worries. Many business owners had to change their business models, saw a reduction in cashflow and customers, and some were forced to close.
In a bid to help businesses, the Government introduced different forms of financial support, including the Bounce Back Loan Scheme (BBLS). This proved hugely popular, with over 1.4 million businesses claiming government backed loans totalling over £45 billion.
It may be hard to believe, but that was 12 months ago, and now it is time for businesses to start repaying the loans. There are a few ways to do this, and in this article, we are going to take you through the options.
Delay your repayments
Many businesses are still trying to get back on their feet. If your business is among these, you can defer your payments to give you more time to build your business back up. Depending on your bank, you may be able to delay your repayments for 6 months or more, giving you a little more breathing space.
Pay as you grow
The Treasury has recognised that many businesses have not had the chance to recover fully, but still want to start clearing their loan. If you are in this situation, ‘Pay as you Grow’ might be a good option.
This scheme allows you to adjust your repayment schedule so that it better suits your circumstances. You may be able to extend the terms of your loan to 6 or 10 years, potentially cutting your monthly payments in half and allowing you to invest more in your business’ recovery.
‘Pay as you Grow’ also gives you the option to make interest-only payments for 6 months (this option may be used up to 3 times) or pause payments completely for 6 months once The Treasury made this decision as so many businesses are still trying to recover from lockdowns and restrictions, with no guarantee as to when businesses will be able to function fully again.
These are being continuously reviewed, and the Chancellor recently announced that this interest-only option is now available from the very first repayment – originally it was only an option once 6 repayments had been made.
‘Pay as you Grow’ options are available to anyone who took out a BBLS, regardless of which bank the loan was taken out through.
What is the best choice for my business?
Your business is unique, so there is no one-size-fits-all answer as to which is the best repayment option.
Some businesses took out a Bounce Back Loan Scheme just in case, and ended up spending none, or very little, of it. In this situation, it might be best to repay the loan in full, or in a couple of payments, so you are working from a clean slate.
Alternatively, you might prefer to pay the money back in smaller instalments and keep the larger chunk of money in the bank for a rainy day, use it to improve your cashflow, or make improvements to your business.
If the Bounce Back Loan has really helped your business, delaying or reducing payments might take the immediate pressure off you and give you a bit more time to get your business on an even keel again.
Whatever situation you are in, it is important to find the best option for you to keep your business in as strong a position as possible. To get some help and advice to make sure you are making the right decision for your business now and in the future, contact us at Purple Lime to arrange a free consultation by emailing firstname.lastname@example.org or calling on 01249 691360.
Visit Purple Lime online at: www.purplelime.uk.com