Repay your Bounce Back Loan at your own pace

With Pay As You Grow, you have three options

You can use these (in any combination) to take some of the pressure off. Use our payment calculator to help understand what this means for your monthly repayments.

1. The payment holidays

• a. Only pay interest for six-months
• With any loan, there’s the money you borrow, and then interest on top of that.
• If you don’t have the money for both at any point in your Bounce Back Loan, you’ll be able to just pay the interest for six months.
• You can do this up to three times while you have the loan: even back-to-back.

• b. Make no payments for six-months
• You’ll be able to pause your repayments (and interest) at any point while you have your loan.
• If you’d like to do this from the moment your first repayment is due, it’d essentially extend your payment-free year to 18 months.
• You can only use this option once in your Bounce Back Loan, though.

If you take either of these options, you’ll also be able to extend your loan by six months for each time you do. But heads up: you can’t do that if you’ve already chosen to repay your loan over ten years rather than six years (the option below).

Here’s an example: if you took a six month payment holiday, and then decided to just pay interest for six months, you could choose to extend your term by 12 months (to do this you would select a six month term extension at the time you choose to make no payments for six months and another six month extension at the time you choose to pay only interest for six months).

2. Extend your loan term to ten years

• By paying back over a longer time period, you’ll be able to bring your monthly repayments down.
• With this one, it’s worth thinking about where you’ll be in ten years (is retiring on the cards, for example?).
• It’s ten years or six years, that’s it: you wouldn’t be able to repay over say, nine years.

With all of these options, you’ll have to repay more overall. Whenever you extend a loan – even just by six months – you end up paying more interest on it. We’ve explained this in more detail below.

Want to see how these options might look for you? Get an indication of your loan payments with our repayment calculator.

It takes minutes to sort

To apply for Pay as You Grow, log on to the Online Bank and navigate to the Loans tab.

Pay As You Grow in more detail

Can I choose more than one of the options?

Yes: you can use any combination of the three options, including taking option 2 at the same time as either of options 1a and 1b. You can then use options 1a and 1b in any order through the life of your loan.

If you extend your loan to ten years, then want to take one of the six-month breaks (either from interest or paying altogether), that’s still fine. Your monthly payments will go up once those six months are finished, so you still cover the total repayment costs within the ten years.

How will Pay As You Grow change my monthly payments?

If you’re extending your loan to ten years, your monthly repayments will fall, but you’ll be paying interest for longer – so will end up paying more. (Your interest rate will always be 2.5%.)

If you choose to take a payment holiday, the interest will continue to accrue on your loan. This means that when you restart your payments after the six months, you’ll owe more to us. So you’ll have to pay more, even if you extend your loan by six months.

If you’re only paying interest for six months, your repayments will be much smaller than before. But your repayment after the holiday will be a bit bigger than if you’d made the full payments (unless you choose to extend your loan term at the same time). When you start paying your loan again, you’ll owe us the same amount. So you’ll have to pay more during the life of your loan, even if you extend your loan by six months.

You can use our repayment calculator to get an indication of how each of the options will change your monthly payments, and the total amount you’ll repay.

If it’s the right thing for you, you can also repay your Bounce Back Loan in full at any time through the app (head to the Loans section) or by giving us a call on 0204 506 8350 (Monday to Friday 8am to 8pm, Saturday 9am to 5.30pm).

Which option is right for me?

It totally depends on your business and what you’re comfortable with. We can’t give you advice ourselves, but we can help you find it: here’s where you can go for independent help. You also might like to talk to a financial advisor or your accountant about this.

• Small Business Commissioner (SBC): an independent public body the government created to help the UK’s small businesses with late payments (call on: 0121 695 7770)
• Business Debtline: a charity just to help businesses dealing with debt (call on: 0800 197 6026)
• Advice NI – Business Debt Service: for sole traders, partnerships and limited companies in Northern Ireland (call on: 0800 915 4604)
• StepChange: for self-employed people and sole traders
• FSB Debt Recovery: a debt service for members of the Federation of Small Businesses (FSB)
• The Money Advice Service: government advice and handy tools and calculators (call on 0800 138 7777)
• Citizens Advice: help with all money worries and debt, including benefits and legal problems (call from England on: 0800 144 8848; Wales on: 0800 702 2020; Scotland on: 0800 028 1456)

The British Business Bank has a range of guidance and resources for all businesses, including content on managing your cash flow and a list of independent advice services.

The British Business Bank’s guide to business resilience

Finally, on the British Business Bank’s page about dealing with debt, you can enter your postcode and find local support for you.

Will taking a Pay As You Grow option affect my credit score?

It won’t affect your credit score to look into or take a plan. But as with all loans, if you’re late for a payment or miss one, it’ll show on your credit report.

Will using Pay as You Grow affect my ability to obtain finance in the future?

Using Pay as You Grow will not, in principle, affect a business’s ability to obtain finance in the future. Pay As You Grow is designed to alleviate borrowers’ financial difficulty, even before it arises, by giving borrowers flexibility in meeting their repayment obligations.

Using Pay as You Grow will not affect a borrower’s credit rating, but it may affect lenders’ future creditworthiness assessments. For example, when considering a request for additional funding a lender will take into consideration incomings and outgoings, including existing debt repayments such as the Bounce Back Loan Scheme facility. It will also consider a business’s total level of debt, which will include the outstanding Bounce Back Loan Scheme facility.

I’ve already missed a payment. Can I set up a Pay As You Grow plan?

If you’ve missed a payment and are currently in arrears, we’ll discuss your circumstances with you to understand if the Pay As You Grow plan is the right option for you. Please reach out to our specialist team by calling us on 0204 506 8350 (Monday to Friday 8am to 8pm, Saturday 9am to 5:30pm) or dropping us an email: businesslendingsupport@starlingbank.com.

You won’t be able to set up a Pay As You Grow plan on the Online Bank.

If you've missed a payment in the past but are now up to date with your repayments, just log on to online banking to get started. If you want to chat first, reach out to our specialist team.

If you’re still worried and not quite ready to give us a call yet, head to our money worries page.

Got more questions? We’ve got some more FAQs to help you understand your options.