11:39 am, May 18, 2020
Larger car dealerships and manufacturers could soon be able to access government-backed loans as the Treasury looks to tweak its loan schemes.
The Financial Times has reported that ministers are looking at offering support to those businesses squeezed in the middle by lifting the cap on state loans available.
Currently, companies with a turnover of more than £250m – which will include many medium to large sized dealer groups – can apply for £50m in bank loans backed by the government.
However, some firms have warned this will not be enough to get them through the crisis.
The changes to the Coronavirus Large Business Interruption Loan Scheme (CLBILS) are currently at the proposal stage but could see the amount companies can borrow quadruple to £200m, reports the FT.
Mike Jones, chairman of accountants ASE Global, said: ‘This is good news for car dealers and manufacturers.
‘The increase in the cap is great news for the larger businesses who are not of investment grade to help them with liquidity as they ramp up to exit the lockdown.
‘All businesses in motor retail will see their cash burn increase in the short term once trading restarts and additional facilities from the government are going to help companies over this hump.’
The Treasury has said the Coronavirus Large Business Interruption Loan Scheme (CLBILS) has lent just £359m to 59 mid-sized and larger businesses.
The scheme gives lenders a government guarantee of 80 per cent against the outstanding balance and the borrower remains liable for the full amount.
The proposals will need the baking of the chancellor Rishi Sunak who is said to be open to tweaking the scheme.
Meanwhile, the government has also revealed that £8.4bn has been lent under the Bounce Back scheme in just six days. It is designed to help the smallest firms with loans up to £50,000, 100 per cent backed by the government.
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