Chancellor Rishi Sunak extends coronavirus business bailout to all viable firms – even those with turnover of more than £500 million
- Chancellor has announced coronavirus business loans scheme being extended
- It will now apply to all viable firms even those with more than £500m in turnover
- Firms with turnover of more than £45m will now be able to apply for up to £25m
- Firms with turnover of more than £250m will be eligible for loans of up to £50m
- Learn more about how to help people impacted by COVID
Chancellor Rishi Sunak has extended the government’s coronavirus business bailout so that all ‘viable’ firms will be able to access loans – even those with turnover of more than £500 million.
The updated version of the Coronavirus Large Business Interruption Loans Scheme, set to launch on Monday, will allow all firms with a turnover of more than £45 million to apply for up to £25 million in finance.
Meanwhile, companies which have a turnover in excess of £250 million will be able to apply for up to £50 million of support.
Businesses with turnovers of more than £500 million were originally not eligible for the scheme but that cap has now been lifted.
Chancellor Rishi Sunak has agreed to a new fund to support struggling mid-sized businesses in the UK.
The scheme for larger businesses was set up by the Treasury to help firms which did not qualify for the Coronavirus Business Interruption Loan Scheme which was designed purely for small and medium-sized businesses.
The extension of the scheme comes after ministers faced fury from some businesses which have seen their bids for support turned down while others have complained of being left out in the cold.
Mr Sunak 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 £330 billion of government support, through loans and guarantees, reaches as many businesses in need as possible.’
One potential drawback of the updated scheme is that firms which access the larger business loans scheme will not be able to access the Bank of England’s Covod Corporate Financing Facility which Easy Jet and Greggs have both borrowed from.
Business Secretary Alok Sharma said coronavirus disruption had ‘struck a heavy blow against businesses of all sizes’ and the government wanted to keep them afloat as best as possible.
‘Expanding this scheme will provide larger firms with the support they need during the pandemic, helping to provide job security to thousands of people and protect our economy,’ he said.
With the UK’s state of lockdown now extended for at least a further three weeks, businesses are scrambling to ensure they can remain solvent until the economy can return to normal.
The government said the new loans would be 80 per cent guaranteed by the state and explained banks must not ask for personal guarantees on any loans under £250,000.
For anything above, the government said that ‘claims on personal guarantees cannot exceed 20 per cent of losses after all other recoveries have been applied’.
Keith Morgan, chief executive of the British Business Bank, said: ‘The new Coronavirus Large Business Interruption Loan Scheme focuses on a relatively narrow area of the market, but one that is vitally important to the UK economy.
‘More finance for viable mid-sized and larger firms will help them protect jobs and be in a better position to resume normal business when the current pandemic subsides.’
Carolyn Fairbairn, director general of the CBI, said the government had provided ‘enormous relief’ to middle-sized businesses but called for more to be done to help smaller firms.
She told BBC Radio 4’s Today programme: ‘We think the other area it is worth looking at hard is the really small loans – below £25,000 of loans – where we have many, many small businesses we’re hearing from all the time who are not able to access the loans.’