News

Coronavirus loans of up to £5m now open to companies ‘in difficulty’

Time 1 year ago

Companies that had been banned from government-backed loans because they were deemed to be too deep in debt can now access the Treasury’s coronavirus scheme, ministers said today (Jul 30).

Some firms originally denied support under the Coronavirus Business Interruption Loan Scheme (CBILS) will now be able to borrow up to £5m from their bank.

They had been classed as ‘undertakings in difficulty’, which usually meant they had high levels of debt and accumulated losses.

Advert

The restriction was applied to the scheme because of state aid rules regulating the type of support the government can give private companies.

Ministers and industry groups had been pushing for changes to the rules to let small businesses that weren’t insolvent access the scheme.

Small business minister Paul Scully said: ‘We have stood by business throughout this crisis, and today’s announcement will mean that even more small firms will be able to access much-needed financial support.

‘Small businesses will play a vital role as we seek to recover our way of life and get the economy moving again, and it is essential we continue to support them through this difficult period.’


More than 57,000 businesses have benefited from the government-backed CBILS so far, taking out £12.6bn in total.

The loans are provided by high street banks but backed by an 80 per cent government guarantee – meaning that the Treasury shoulders most of the risk should the company be unable to pay back what it borrowed.

Companies are eligible if they have fewer than 50 employees and an annual turnover of under £9m.

Chris Wilford from the Confederation of British Industry said: ‘This is an important step that will help more businesses get the critical support they need.

‘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.’

Shadow business secretary Ed Miliband said: ‘Any help in breaking down the obstacles to loans is welcome but this has all taken far too long with too many businesses left out in the cold.

‘Time will tell whether this sorts out the growing backlog of CBILS loans.’

John Bowman's avatar

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.

More stories...

Advert
Server 190