More small businesses are set to benefit from loans of up to £5m under the coronavirus business interruption loan scheme (CBILS) following changes to state aid rules, as a result of government and industry lobbying
Previously businesses which were classed as ‘undertakings in difficulty’ were unable to access CBILS because of EU rules. These are usually businesses with high levels of debt and accumulated losses.
However, from 30 July businesses in this category and which have fewer than 50 employees and a turnover of less than £9m can apply.
The change follows lobbying by the government and industry groups for a relaxation of the rules in the European Temporary State Aid Framework to make sure that small businesses who are not insolvent or receiving rescue aid can benefit from the support.
John Glen, economic secretary to the Treasury, said: ‘Our loan schemes have been a key part in supporting businesses enabling them to bounce back as we kick start the economy.
‘I’m delighted that our work with the Commission has paid off so we can further support the smallest businesses.’
Glen and small business minister Paul Scully have written to accredited lenders setting out their expectation that these changes will be implemented to ensure more businesses are receiving support.
To date, over 57,000 firms have used the CBILS.
Chris Wilford, head of financial services policy, CBI said: ‘These eligibility hurdles have been a real stumbling block for many firms across the UK throughout the crisis.
‘These were put in place to avoid governments bailing out failing companies, but those rules were established in normal times.
‘They have had a real impact on the ability of some high-growth firms and those with more complex structures being able to access the loan schemes.’
The Treasury said lenders will also shortly be receiving guidance proving clarity on how to identify undertakings in difficulty, which will help viable larger businesses access support too.