Covid-19: loan guarantee scheme extended to cover all larger firms
20 Apr 2020
The government-backed loan scheme for large businesses affected by coronavirus has been expanded to cover all viable firms, the Chancellor has announced
20 Apr 2020
The coronavirus large business interruption loans scheme (CLBILS), set to launch on Monday, will now be available to all firms with a turnover of more than £45m, who can apply for up to £25m of finance, and up to £50m for firms with a turnover of more than £250m.
Business with turnovers of more than £500 million were originally not eligible for the scheme, which is being set up to help firms who do not qualify for the other two options: the existing coronavirus business interruption loan scheme (CBILS) for small and medium sized businesses, and the Bank of England covid corporate financing facility for investment grade companies.
Rishi Sunak, Chancellor of the Exchequer, said: ‘I want to ensure that no viable business slips through our safety net of support as we help protect jobs and the economy. That is why we are expanding this generous scheme for larger firms.
‘This is a national effort and we’ll continue to work with the financial services sector to ensure that our £330bn of government support, through loans and guarantees, reaches as many businesses in need as possible.’
The scheme will be available through a series of accredited lenders, which will be listed on the British Business Bank website, and has recently updated to include over 40 institutions.
The government is clarifying the position for firms owned by private equity, which will be able to access the guaranteed loan schemes. It has also indicated it is considering how best to support start up and early stage companies, with announcements expected later.
Adam Marshall, director general of the British Chambers of Commerce, said: ‘It is good to see the Chancellor listening to real-world business concerns, and expanding assistance to good companies facing severe cash constraints as a result of the coronavirus crisis.
‘These changes fill an important gap in government support, and could make a real difference to medium-sized and larger-firms navigating challenging circumstances. It’s now crucial to ensure that this enhanced support reaches companies in difficulty as quickly as possible.’
Separately, latest figures from UK Finance show over £1.1bn has been lent to SMEs so far via CBILS. Total lending under the scheme for smaller companies has grown by £700m in the last week, an increase of 150%.
However, while the number of loans provided through CBILS has more doubled to 6,020 in the past seven days, a week, lenders have received 28,460 formal applications. The trade body acknowledged that staffing levels at participating banks had been hit by coronavirus, while remote working has meant there are some delays to approving loans.
The average value of a CBILS loan has grown to over £185,000.
Lockdown period extended
News of the expansion of the support for larger businesses came as the government announced the lockdown, originally announced on 23 March, is to be extended for at least three more weeks and will be reviewed again in early May.
Carolyn Fairbairn, CBI director-general, said: ‘The government is right to extend the lockdown and has the full support of business. Public health remains firms’ number one priority.
‘At the same time, extending restrictions will bring serious challenges for many companies.
The government’s lifelines for business will matter more than ever. In particular, it’s vital that the job retention scheme starts delivering cash to struggling companies next week, as HMRC is working hard to achieve. Firms also need urgent clarity on the scheme’s duration.’
By Pat Sweet