U.K. Businesses Gain Easier Repayment Terms for Pandemic Loans
(Bloomberg) -- More than 1.4 million U.K. businesses will get more flexibility for repaying government-backed loans they took out to weather the Covid-19 pandemic, Chancellor Rishi Sunak said.
The change will make it easier to defer repayments, waiving the requirement that businesses make the first six repayments before qualifying for a pause. This means borrowers will be allowed as much as an 18-month grace period starting from when they took out the loan, the Treasury said in a statement Friday.
The expanded options are available to more than 1.4 million businesses that took out almost 45 billion pounds ($62 billion) through the “Bounce Back” loan program, and lenders will be reaching out to the businesses, according to the statement. Other parts of the program allow borrowers to extend loan terms to 10 years from six years and make interest-only payments for as many as six months.
“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,” Sunak said in the statement.
The announcement comes as Sunak ponders how to prime the economy in his budget next month. With the deficit set to spiral to 400 billion pounds this year, tax rises rather than spending cuts are on the agenda. And while lockdowns across the country continue to hammer consumer activity, Britain’s relative advances in getting its population inoculated against the coronavirus give some reason for optimism.
“While our vaccine rollout is moving at an incredible pace and the end is in sight, we know times are still tough for many companies and extra support is needed,” Business Secretary Kwasi Kwarteng said.
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