Through the government’s PAYG scheme, borrowers can request an extension of their loan term to 10 years from the standard six years, reduce their monthly repayments for six months by paying interest only, or take a full repayment holiday for up to six months. All lenders are writing to their customers at least three times before repayments are due to start to remind them and explain the options available.

With repayments due to start in early June for many borrowers, the research – carried out in partnership with YouGov – found that a third (34%) of businesses are already fully aware of the options available, while another 37% are only somewhat aware.

Around half of businesses (48%) say their bank has been the main source of information about how to repay their loan – either through letters and emails, phone calls or its website – while more than one in 10 (13%) say they haven’t yet looked for any information about making the loan repayments.

Gareth Oakley, managing director of Business Banking at Lloyds Banking Group, said: “We know small business owners are incredibly busy and many simply won’t have had time to think about their loan repayments yet. The good news is that all Bounce Back Loan customers will receive at least three letters or emails from their lender before repayments are due to start, explaining how the Pay As You Grow scheme works.

“We’d encourage businesses to look carefully at the support available and what using Pay As You Grow would mean for future repayments. For most customers, it’s quick and easy to select an option via their lender’s website, which if needed can provide vital breathing space to get their business back on its feet as lockdown restrictions are gradually eased.”

More than a third (35%) of small businesses intend to make the standard monthly repayments as set out in their original loan agreement. Perhaps surprisingly, 16% of borrowers say they plan to pay back their BBL in full, before repayments are due to start.

In terms of the Pay As You Grow scheme, 13% of businesses are planning to extend the loan term to 10 years, making this the most popular PAYG option, while just 5% of businesses plan to make use of a full six-month repayment holiday.

The research also shows that almost half (48%) of businesses still have the majority of their BBL funds unspent, including around a quarter (23%) who are still holding on to the full amount. Just 26% of businesses say they have spent all the money they borrowed.

More than a third of businesses (34%) say they would definitely not have survived the impact of the pandemic without the Bounce Back Loan, while a further 12% are unsure.

Gareth Oakley continued: “It’s encouraging that so many businesses with a Bounce Back Loan feel ready to make the standard repayments set out in their loan agreement, or even pay back the borrowing in full straight away. Whilst not the case for everyone, it’s clear from the funds which have not yet been spent that many took the loan as a contingency measure to see them through uncertain times.”