It is hoped the expanded loans, which will be available from next week, will help ensure those large firms that do not qualify for the Bank of England’s Covid Corporate Financing Facility (CCFF) have enough finance to meet cashflow needs during the outbreak, and follows criticism that larger firms were unable to access enough credit to keep them solvent during the Coronavirus lockdown.
CLBILs, which were first introduced in early April, are designed to support large businesses with an annual turnover of more than £45m.
Initially, viable businesses with an annual turnover of more than £45m could apply for up to £25m of finance under the scheme; while those with a turnover of more than £250m could apply for up to £50m of finance, which has now been raised.
From 26 May, company boards will now be able to borrow up to 25% of turnover, up to a maximum of £200m, with the Government underwriting 80% of the debt.
Companies 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.
The Treasury says that these restrictions will also apply to CCFF participants that wish to borrow money beyond 12 months from today (19 May).
“It is good to see the government continue to listen to business concerns and make improvements to existing schemes," says the British Chamber of Commerce's head of economics Suren Thiru, commenting on the CLBILs extension.
“These important changes could make a real difference to larger firms in particular and alongside the other lending support schemes will help ensure that more businesses of all sizes get access to the finance they need to help weather this unprecedented economic storm.”