Pay As You Grow (PAYG) is the new government relief that allows businesses with Bounce Back Loans to alter their payment arrangements in three ways to ease their debt burden.
Businesses can opt to:
- Request an extension of their loan term to 10 years from six years, at the same fixed interest rate of 2.5%
- Reduce their monthly repayments for six months by paying interest only. This option is available up to three times during the term of their Bounce Back Loan
- Take a repayment holiday for up to six months. This option is available once during the term of their Bounce Back Loan.
These options, according to the British Business Bank, can be used independently or in combination. It is worth noting however that using any of these options may result in a greater interest payment overall.
It is important to remember, it is better for your business to extend repayment to 10 years and reduce monthly repayments than to risk failing to meet your payments and damaging your credit score.
A number of lenders are advising that while accessing PAYG won’t affect your credit score, it may affect your “credit worthiness” (or similar language). You should speak to your bank about what PAYG could mean for future assessments, to help you make a fully informed decision on whether PAYG is right for you.
We also urge businesses to check with their lenders what the notice period for accessing PAYG is. If left to the last minute, amendments to repayments may only be implemented after repayments begin.
Who can I contact?
FSB members who have an FSB Business Current Account and are worried about their finances can contact The Co-Operative Bank’s dedicated Business Support Team, who are experienced in supporting customers who are in financial difficulty.
You can reach the Business Support Team by emailing [email protected]
- Please only include your name, the name of your business and the contact number to reach you on and we will aim to contact you within 48 hours of the receipt of your request.
- For security reasons, please do not include any sensitive or confidential information in your email.
FSB Funding Platform also offers FSB members impartial advice from finance advisers to support you with your business finance options.
If you are worried about your finances, you can also contact the following organisations for free advice:
Business Debtline gives free and independent debt advice over the phone and online.
Money Advice Service
The Money Advice Service offers free and impartial money advice, including debt support, via a range of channels including telephone, web consultation and WhatsApp.
StepChange is a UK charity which offers free debt advice based on an assessment of your situation, as well as practical help and support.
The Citizens Advice Bureau offers free and impartial advice for people experiencing financial and debt-related problems.
Other business finance support options
In addition, the British Business Bank has a range of guidance and resources available to all businesses, including content on managing your cashflow and a list of independent advice services.