Business organisations in Coventry and Warwickshire have welcomed the chancellor's decision to give small firms more 'breathing space' to pay off Government-backed loans that have supported them through the Covid-19 crisis.

Rishi Sunak, the Chancellor of the Exchequer, has announced a range of options available – which are being dubbed 'Pay As You Grow' – to companies that have taken out Bounce Back Loans (BBLs) of up to £50,000.

Under the new terms, businesses can extend the length of the loan from six years to ten; make interest-only payments for six months, with the option to use this up to three times throughout the loan; and pause repayments entirely for up to six months.

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: "This is a very welcome step for those businesses that took out BBLs who will have been growing increasingly anxious at the prospect of having to start repaying in May – with no sign that an economic recovery will have begun by then.

"Banks are going to begin contacting businesses who took out a BBL to let them know the options available to them and it will, for many, be a real benefit when it comes to cashflow.

"This change is something that chambers have been pushing government to look at because nobody envisaged that we would be in this position when the support was first announced nearly a year ago and we are delighted that business voices in Coventry and Warwickshire have been heard on this.

"Colleagues at the British Chambers of Commerce are now talking to Government to bring about changes to the terms of Coronavirus Business Interruption Loans (CBILs) that were aimed at bigger businesses, as well as a range of other measures that could ease the cashflow headache for our hardest hit businesses in this crisis."

Craig Humphrey, managing director of the CWLEP Growth Hub, said: "From talking to businesses in all sectors on a daily basis, this is the right decision to help them repay the loans.

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"With many businesses still unable to re-open due to the national lockdown, many had few cash reserves to start paying off the loans in May so this will give them valuable breathing space.

"The Chancellor's announcement that there will also be greater flexibility in the repayments is also good news since it will protect the short-term future of the businesses as well as help to secure jobs."