Bounce Back Loan (BBL) Get Extra £500 Cash Monthly?

I wrote on this last November when base interest rates were 2.5% (Now 5.25%) When repayment started on BBL the repayment period defaulted to 5 years.  You have the option at any time to repay over 9 years. If you borrow money on an overdraft at 9.75% (Base plus 2.5% min plus 1% arrangement fee) this is nearly four times the BBL Rate.

Yes, the debt still needs repaying, but why strive to repay debt too quickly at 25% of the cost of an overdraft or a variable rate loan? Use the £500/month cash released to repay the latter more expensive debt quicker.

Alternatively, if you don’t have any other debt, put the £500 in a savings account and earn double the cost of BBL debt. Not what a BBL was designed to do, but you might be saving up to pay that tax bill or make an investment in the future.

Alternatively stop the overdraft increasing as quickly with a price cost squeeze in agricultural enterprises with an extra £500 per month to help. 

Log in online to your bank account and reset the repayment period to nine years at the stroke of a few buttons.  When you win the lottery or the account is permanently in credit, you can increase the payments or clear the debt completely.  It should be the last debt you clear as it is the cheapest!

For an independent overview of your business finances challenge Gerard, at gerardfinnan@fcgagric.com or Tel 07976 426420 to suggest positive practical improvements to your business.