Bounce Back Loan Claimants Given Extra Breathing Space With Pay As You Grow

5th Mar 2021
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The government is now offering greater flexibility around loan repayments and terms. Find out more.

More time to pay

Those who have taken advantage of the government’s Bounce Back Loan scheme now have more flexibility with their repayments thanks to a recent government announcement. Borrowers now have the option to delay their repayments for a further six months, offering a much needed hand as the pandemic continues. Lenders will get in touch directly to inform individuals of this new “Pay as You Grow” initiative which the six month delay is part of, and borrowers will hear from lenders three months before their first repayment is due.

Administered by the British Business Bank, businesses first started to see the loans hit their accounts in May 2020. First repayments are set to start a year later in May 2021.

Almost £45 billion has been lent out to businesses under the Bounce Back Loan scheme, and Pay as You Grow is being offered to more than 1.4 million of them across the country. In addition to the six month extension before repayments start, Pay as You Grow also gives borrowers the chance to extend the length of their loans from six to 10 years. This in turn means they can:

  1. Slash their monthly repayments in half
  2. Make repayments on an interest-only basis for six months, or
  3. Stop repaying altogether for a maximum of six months.

The Chancellor has also extended the flexibility of the third option

Where a business owner wishes to stop repaying altogether for six months, it used to be they would need to wait until they had already made six months’ worth of payments. However, the latest changes introduced by the Chancellor state that claimants can now delay payments right from the start - effectively meaning they may not make their first payment until 18 months after the loan was taken out.

And of course, the Bounce Back Loans are still interest-free for the first year. After the interest-free period has finished, borrowers will benefit from a low fixed interest rate of 2.5%.

A welcome move for COVID-weary businesses

When lenders contact borrowers they will lay out the flexible payment options in detail and provide all the information needed. The measures have been broadly welcomed as they give claimants the chance for some extra breathing space to get back on their feet. Not only that, but the move it set to protect jobs and kept local economies moving.

As every business is different in how it operates and how it has been affected by COVID-19, it’s hoped the scheme will allow borrowers to manage their repayments in a more tailored way.

Thousands of growing businesses are also benefitting from R&D Tax Credits

Expanding a business, launching new product ranges and employing staff to engage in research and development work can be expensive. But since the year 2000, the UK government has offered a highly generous tax relief to both profit and loss-making companies actively working on eligible R&D projects. It’s known as R&D Tax Credits.

The scheme is open to all companies regardless of size or sector. As long as a scientific and/or technological challenge has been addressed in the course of the project that involved financial risk, then R&D Tax Credits could well result.

The pandemic has hit hard and for thousands of ailing businesses R&D Tax Credits can make a huge difference in plugging the lost revenue gap. Once a successful application has been made to HMRC, as much as 33% of eligible R&D-related costs can be claimed back, either as a reduction in Corporation Tax or as a cash lump sum.

Companies claim for development work they took on in the previous tax year, although firms can claim R&D Tax Credits up to 24 months following the R&D activities. See our R&D Tax Credits page for more details.

Work alongside the R&D tax and funding specialists at Myriad Associates

The R&D Tax Credits scheme is a fantastic opportunity for businesses up and down the UK to invest in innovative new challenges. But the major problem lies in the application process itself - it’s complex, easy to over or under claim, and is somewhat longwinded. The onus very much sits with the applicant in ‘proving’ to HMRC that their business, their project and their costs are indeed eligible. There are many grey areas, and it’s often far from obvious whether a specific piece of expenditure qualifies or not.

Get it wrong, and at best some eligible expenditure will be inadvertently left off meaning money is missed out on. But at worst (and we’ve seen this happen many times) claimants will accidentally add on costs which should actually be disregarded. This leads to HMRC questions being raised, or even a full-blown tax enquiry. It’s unpleasant, time consuming and potentially very expensive - which is why working with experienced R&D tax and funding consultants like Myriad Associates is so highly recommended.

Dealing with the specific rules and guidance around R&D Tax Credits can be extremely daunting, even for the most experienced of accounting professionals. Then of course there’s the technical report that supplements an R&D Tax Credits application. It must be accurate, written in a certain (rather niche) way, and again be highly compelling.

At Myriad Associates we don’t deal in general accountancy work - only R&D Tax Credits, R&D grants and various other elements of R&D funding. We have two decades of experience solely in this area, and will work with both you and your clients in putting together a highly successful, optimised application. See our recent blog: 5 Excellent Reasons To Work With An R&D Tax Relief Consultancy.

If you believe one or more of your clients are eligible for R&D Tax Credits, or would like to discuss how R&D Tax Credits interact with other COVID-19 government supports including Bounce Back Loans, please do call us on 0207 118 6045. We’re working as usual throughout the pandemic, and all our services are offered via video call, email and telephone for complete convenience to you. Alternatively, send us a message using our contact page and we'll get back to you straight away to discuss your requirements.

We are proud of our 100% success rate, so why not see how your firm can partner with us today.