Why have my Bounce Back Loan Repayments Increased?

With many companies a year or so into repaying their Bounce Back Loans, it can be confusing to see a change in your loan repayments, whether that’s due to an increase or decrease in the monthly charges.

At The Insolvency Experts, we’re here to provide any support you may need during these difficult times.

When will my Bounce Back Loan repayments start?

You won’t start repaying your Bounce Back Loan (BBL) until the initial 12 month payment holiday comes to an end.

Before you start to repay your loan, you can choose to extend it using the Pay As You Grow (PAYG) scheme. This scheme will affect your loan repayments, and how you are able to repay the loan.

Why have my Bounce Back Loan repayments increased?

One of the reasons your loan repayments have increased could be down to the fact that you may have taken a six month payment holiday under the PAYG scheme.

During this period, you would have made no interest or loan repayments. This means the total amount you owed will have increased as the interest accumulates during the payment holiday.

For example, the total amount repayable on a £50,000 loan would increase from £54,431.60 to £55,100.49.

Why are my Bounce Back Loan repayments different each month?

With any loan, there are two parts which need to be considered: the amount you borrowed and need to repay, known as the principal, and the interest on top of that.

With your BBL, the principal repayments will stay the same each month unless you choose to use the PAYG scheme.

Your monthly interest will typically be calculated based on the amount of principal that’s left outstanding. As you pay more or less principal, over time, your interest may fluctuate.

Can I make flexible repayments of a Bounce Back Loan?

You can make flexible overpayments on a regular basis with no additional charges if you’re looking to pay your Bounce Back Loan quicker. Doing this will help to save you money on your interest payments.

If you do choose to make overpayments, your monthly repayment rate will stay the same so you can pay the loan back sooner. Not every lender has the same rules regarding overpayments, so always check with your lender first.

Alternatively, through the PAYG scheme, you can choose to take a six-month interest only holiday. This will reduce your monthly repayments whilst ensuring you’re not paying any additional interest as you would if you took another repayment holiday.

For information on this topic, read our guide on getting an extension for your BBL repayments.

Can I reduce my Bounce Back Loan repayments?

Yes, you can reduce your Bounce Back Loan repayments by extending your loan term length from 6 to 10 years under the PAYG scheme.

For many, extending their loan term has already proven hugely beneficial, with their monthly repayments being half of what they were under a six year loan length.

Will I pay less if I pay my Bounce Back Loan early?

If you choose to pay your Bounce Back Loan early, you will pay less interest overall, meaning you will be paying less.

There are no early-repayment charges and you can make one-off payments of any amount, as well as additional payments on a regular basis.

If you pay the full amount before your 12 month repayment holiday finishes, you will not pay any interest.

If you are struggling with finances within your business, get in touch for support from our expert team.