How to pay back Bounce Back Loans

March 17, 2021

With the outbreak of COVID-19 and the subsequent UK Lockdown, times have been tough for businesses in the past year. To combat the stress placed on businesses by COVID-19 and the ensuing restrictions, the British government introduced the Bounce Back Loan Scheme - a loan scheme designed to enable businesses to access finance more quickly. Although this article covers Bounce Back Loans, the advice also applies to COVID-19 Business Interruption Loan Scheme (just note that the terms of this second scheme are different to the terms of the Bounce Back Loan). 

These loans have been brilliant for many businesses - but March 2021 sees the beginning of the pay-back period. Here at itsettled, our aim is to help you feel confident with your business finances and ease stress from late payments and debt, so we’ve written up a guide full of our tips for paying back your Bounce Back Loan. 

  1. Understand the terms of your loan - what breaks can you have and how many times can you use them? 

Firstly, it’s important to make sure you understand the terms of your loan. Ensure that you have all the details of the loan for your own reference, including the amount you were given initially, the interest rates on the loan, and what date the total amount is due. 

The most important thing to note here is that the government are paying the interest and fees on the loan for the first twelve months. However, after this (at the date of writing), the business is expected to pay interest as well as capital on their loan. All loans currently have a low interest rate of 2.5%.

Some aspects of the loans include six-month repayment breaks and six month interest-only payment periods amongst others. Make sure you note these breaks and note down each time you take one - keep an up to date record to ensure you have a clear understanding of the situation. 

  1. Set savings goals for the loan

Just as with any loan, it is important to create a plan for paying back the money you have borrowed. Work out a feasible and sensible repayment plan - if you know some months you have a higher turn-over than others, reflect this in your plan. Allow yourself extra time for repayment - you never know what could happen, so allow for unexpected necessary payments. As the government have really extended the payment period to ten years instead of six, this does give businesses now have more time, however this also will also increase the amount of interest due, so make a careful and considered decision on when you want to have fully paid back your loan. 

  1. Ensure you have a good credit control process in place 

It is absolutely vital, now more than ever, to have a good credit control process in place for your business. If you don’t have a healthy cash flow, you will struggle to pay back your loans, as money will inevitably go towards paying staff or other recurring necessities. With itsettled, you can chase invoices before they’re even due, without destroying the customer/-client relationship that you’ve built. If you’re unsure of the benefits of a good credit control system, why not try our DSO Calculator? We created the Days Sales Outstanding Calculator from industry measures for businesses like yours - just tap in some key stats and you’ll find out how much money you could inject back in to your business by using itsettled. 

We hope you enjoyed our guide to paying back a Bounce Back Loan - let us know your feedback in the comments below!

Start your free trial of itsettled today - we offer one free month or one invoice free - just get in touch with us at for more information.

The itsettled team.

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