BBLS Pay As You Grow vs refinance break-even calculator
A Bounce Back Loan at 2.5% fixed is below every UK commercial rate available in 2026, so a pure cost refinance almost never breaks even. A strategic refinance, one that funds growth working capital or consolidates expensive debt, often does. This calculator compares the extra interest of refinancing against the value the new facility unlocks, so the decision is differential cost against strategic value, not the headline rate.
Director, FundBiz
Oliver leads FundBiz's specialty finance comparison and matching engine. With a background in UK commercial finance, he oversees lender partnerships, eligibility logic and post-decline routing.
Last reviewed: 29 June 2026
Model the break-even
- BBLS interest (2.5% fixed)
- £1,556
- Refinance interest (same balance)
- £7,218
- Differential cost of refinancing
- £5,661
- Strategic value (total)
- £0
- Verdict
- Keep BBLS
The differential is computed on the BBLS-replacement portion only, at like-for-like term, so it isolates the rate cost. Illustrative; actual offers depend on the lender's underwriting and any early-repayment terms.
The maths in plain English
- The BBLS side. Take the outstanding balance, apply the 2.5% fixed rate, and compute total remaining interest over the remaining term using the standard amortising-loan formula.
- The refinance side. Apply the achievable commercial APR (typically 8% to 14% for clean credit in 2026) to the same balance over the refinance term, and compute total interest.
- The differential. Refinance interest minus BBLS interest. This is always positive on a rate-only comparison, because 2.5% is below every commercial rate.
- The strategic value. Quantify what the refinance unlocks beyond the BBLS replacement: margin on new working capital, the cost saved by clearing expensive concurrent facilities, or the value of freeing balance-sheet capacity.
- The break-even. If quantified strategic value exceeds the differential over the refinance term, refinance breaks even. If not, keep the BBLS and use Pay As You Grow to manage cashflow.
Worked examples
| Scenario | Differential cost | Strategic value | Verdict |
|---|---|---|---|
| Pure cost refinance | £5,662 | £0 | Keep BBLS |
| Refinance with new working capital | £5,662 | £100,000 | Refinance breaks even |
| Refinance to consolidate stacked MCAs | £7,794 | £22,950 | Refinance breaks even |
All three replace a £30,000 BBLS at 2.5% over 4 years (about £1,560 interest). Pure cost refinance at 11% adds about £5,660 of interest with nothing to offset it, so keep the BBLS. Add £70,000 of working capital producing £25,000 a year of margin and the strategic value dwarfs the differential. Consolidating stacked MCAs saves far more than the £7,790 the higher 14% rate costs.
| Scenario | BBLS interest (2.5%) | Refinance interest | Differential cost | Strategic value | Verdict |
|---|---|---|---|---|---|
| Pure cost refinance, £30,000 at 11% / 4yr | £1,556 | £7,218 | £5,661 | £0 | Keep BBLS |
| Refinance + £70,000 working capital (£25,000/yr margin x 4yr) | £1,556 | £7,218 | £5,661 | £100,000 | Refinance breaks even |
| Refinance to consolidate stacked MCAs, £30,000 at 14% / 4yr | £1,556 | £9,350 | £7,794 | £22,950 | Refinance breaks even |
Source: FundBiz BBLS PAYG vs refinance worked examples
Interest from the standard amortising-loan formula. Differential is the BBLS-replacement portion at like-for-like term. Strategic value is undiscounted; SMB models typically discount it for risk and timing. Illustrative; BBLS rate is 2.5% fixed for the life of the loan.
View as plain-text Markdown
### Worked examples: BBLS Pay As You Grow vs commercial refinance break-even | Scenario | BBLS interest (2.5%) | Refinance interest | Differential cost | Strategic value | Verdict | | --- | --- | --- | --- | --- | --- | | Pure cost refinance, £30,000 at 11% / 4yr | £1,556 | £7,218 | £5,661 | £0 | Keep BBLS | | Refinance + £70,000 working capital (£25,000/yr margin x 4yr) | £1,556 | £7,218 | £5,661 | £100,000 | Refinance breaks even | | Refinance to consolidate stacked MCAs, £30,000 at 14% / 4yr | £1,556 | £9,350 | £7,794 | £22,950 | Refinance breaks even | Source: FundBiz BBLS PAYG vs refinance worked examples Interest from the standard amortising-loan formula. Differential is the BBLS-replacement portion at like-for-like term. Strategic value is undiscounted; SMB models typically discount it for risk and timing. Illustrative; BBLS rate is 2.5% fixed for the life of the loan.
“The break-even maths is honest about interest, but it does not price two real things. First, the personal guarantee: a BBLS carried no director PG because the government backed it in full, and almost every commercial refinance moves the balance into the standard PG regime, so you are adding personal liability that the differential figure never shows. Second, Pay As You Grow already lets you extend the term to ten years or take interest-only periods at the same 2.5%, so for a borrower whose only problem is cashflow, PAYG usually beats a refinance before strategic value is even in the conversation.”
FAQ
Why would anyone refinance a BBLS at 2.5%?
Three reasons: freeing balance-sheet capacity so new lenders have more appetite, removing the BBLS obligation entirely, or accessing more capital by folding the balance into a larger commercial facility that funds new working capital in one place. None of these is about the rate, which is why the strategic value drives the decision.
Can I keep BBLS and take new commercial debt?
Yes. Nothing prevents stacking new commercial debt on top of an existing BBLS. The lender sees the BBLS in the accounts and on the British Business Bank register, factors it into total committed debt, and underwrites the new facility with the BBLS in place. The BBLS itself does not block new lending.
What does Pay As You Grow let me do?
Three options: extend the term from 6 years to 10 years to lower the monthly payment, take one 6-month payment holiday, or take up to three separate 6-month interest-only periods. The 2.5% fixed rate continues throughout, and the options can be combined.
When does refinance make sense even at higher rates?
When the strategic value of the additional facility exceeds the rate uplift on the BBLS portion. Refinancing a £30,000 BBLS into a £100,000 term loan costs an extra few thousand in interest on the BBLS portion but releases £70,000 of working capital; if that capital funds margin worth several multiples of the uplift, it is a strategic refinance, not a cost one.
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Last reviewed: 29 June 2026.