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Government extends maximum loan size for large businesses

19-May-2020 - Last updated on 19-May-2020 at 09:43 GMT

Finance option: the Government has increased the amount large firms can borrow

The Government has increased the amount large businesses can borrow from £50m to £200m and it will become available from next week (Tuesday 26 May).

The Coronavirus Large Business Interruption Loan Scheme (CLBILS), which was first announced in April, is to help ensure large companies that do not qualify for the Bank of England’s Covid Corporate Financing Facility have enough funds to meet cash flow needs during the outbreak.

Economic secretary to the treasury John Glen said: “We’re determined to support businesses of all sizes throughout this crisis, and our loans and guarantees have already provided more than £32bn to thousands of firms.

“We are increasing the maximum loan to £200m to ensure companies get the help they need.”

Finance options

Businesses eligible for the scheme will be able to borrow either 25% of their turnover or £200m – whichever is the lower sum – and lenders who want to offer larger loans will need to undergo further accreditation checks.

Firms borrowing more than £50m through CLBILS will be subject to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan, including a ban on dividend payments and cash bonuses, except where they were previously agreed.

Finance is available in the form of term loans, revolving credit facilities (including overdrafts), invoice finance and asset finance.

The scheme gives the lender a Government-based partial guarantee (80%) against the outstanding balance of the facility.

Government support

These restrictions will also apply to Covid Corporate Financing Facility participants who want to borrow money beyond 12 months from today (Tuesday 19 May 2020).

This is to ensure the money is used to keep the company from going under through the crisis.

Firms have received £32bn in loans and guarantees from the Government. This includes 268,000 Bounce Back Loans, worth £8.3bn.

It also includes 36,000 loans worth more than £6bn through the Coronavirus Business Interruption Loan Scheme, and £359m through CLBILS, as well as £18.7bn through the Covid Corporate Financing Facility.

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