Businesses with a turnover of more than £45m will be allowed to access funding through a new government scheme, the chancellor has announced.
Rishi Sunak said the government wanted to ensure that “no viable business slips through our safety net of support as we help protect jobs and the economy” during the coronavirus outbreak.
Sky’s city editor Mark Kleinman reported at the weekend that ministers were preparing to overhaul the emergency loan programme for larger companies whose future has been put at risk of collapse by the COVID-19 pandemic.
From Monday, firms can apply for loans accredited by the British Business Bank, through the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
Companies with sales between £45m and £250m will be able to apply for the short-term loans and financial support of up to £25m if they have been forced to halt operations or been impacted by the virus shutdown.
Larger firms with sales of more than £250m will also be able to access the support.
But if they access CLBILS, they will be unable to use the Bank of England’s Covid Corporate Financing Facility (CCFF).
EasyJet and Greggs have both already borrowed from the latter.
Sky News has learnt that the Treasury has decided to allow companies which are majority-owned by major private equity groups to access CLBILS on an individual basis.
Buyout firms had been uncertain about whether a single £50m loan cap would be applied across a financial sponsor’s entire portfolio of investments.
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 £330bn of government support, through loans and guarantees, reaches as many businesses in need as possible.”
Business Secretary Alok Sharma said expanding the scheme would “provide larger firms with the support they need during the pandemic, helping to provide job security to thousands of people and protect our economy”.
Keith Morgan, chief executive of 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.”
With the news that the UK’s COVID-19 lockdown will continue for at least another three weeks, businesses will be eager to make sure they can stay solvent until the economy gets back to a semblance of normality.
The government said the new loans would be 80% guaranteed by the state and added that banks must not request personal guarantees on any loans under £250,000.
For anything above, “claims on personal guarantees cannot exceed 20% of losses after all other recoveries have been applied”.