An extension of the Chancellor’s Pay as You Grow repayment flexibilities will “give valuable breathing space” to many hospitality businesses, as long as banks cooperate with the new flexible terms, UK Hospitality CEO Kate Nicholls has said.

In changes to the original scheme, announced by Chancellor Rishi Sunak yesterday (8 February), businesses that have taken out a Bounce Back Loan will now have the option to tailor payments according to their circumstances, and will be able to delay all repayments for a further six months.

Now available to over 1.4 million businesses across the country, the option to pause repayments will be given to all borrowers from their first payment, rather than after six repayments had been made as originally planned.

Businesses will also be able to extend the length of their loans from six to ten years – reducing monthly repayments by almost half – and make interest-only payments for six months.

As part of the scheme, lenders will be expected to directly inform customers of Pay as You Grow, and borrowers have been told to expect correspondence three months before their first payment is due.

UK Hospitality CEO Kate Nicholls has welcomed the announcement, though warned of the importance of banks’ willingness to comply.

“Whilst this does provide relative respite for some, it’s important that banks are as flexible as possible in allowing hospitality businesses to access better terms and follow through with this announcement,” she said.

“Government has a role to play if this is not seen to be taking place.”

She also reignited calls for a roadmap, rent solution, rates relief and VAT cut extension.

“The survival of thousands of businesses and the ability of the hospitality sector to play a full part in the nation’s economic recovery hangs in the balance,” she said.

“These measures will help give hospitality a fighting chance to get through this crisis, to grow and create jobs once again.”