UK firms that took out COVID loans will be given some “breathing space” to make their first repayment, Chancellor Rishi Sunak has just announced.

The Treasury announced that over 1.4 million firms who have taken out the bounce-back loan will be able to pay it back over a 10-year period instead of six.

Afford Bond Director, Paul Edwards commented: “When the bounce-back scheme was launched in the late Spring last year, firms were allowed to borrow up to £50,000 to help them stay afloat during the pandemic and many took advantage of this. This lengthening of time to pack it back is going to be a huge help to businesses going forward now as we come out of this unprecedented situation.”

UK businesses have also been given the option to only pay the 2.5% interest on the loans or pause repayments altogether for six months, but only after six contributions have been made.

Rishi Sunak said: “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. That’s why we’re giving bounce back loan borrowers breathing space to get back on their feet, through greater flexibility and time to repay their loans on their terms.”

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