Larger businesses to benefit from Business Interruption Loans of up to £200 million

19 May 2020

The Treasury has announced that the Government has increased the maximum loan amounts available under the Coronavirus Large Business Interruption Loan Scheme (CLBILS), from £50 million to £200 million.

The loans under the expanded scheme will be made available to large businesses who have been affected by coronavirus. The changes mean that companies receiving help through CLBILS and the Bank of England’s Coronavirus Corporate Financing must not pay out any cash bonuses, or award any pay rises to senior management, including board members. They also face limits on share buy-backs during the period in which the loan is active.

The maximum loan size amount is currently £50 million. This will be increased to £200 million to ensure that those larger firms who do not currently qualify for the Bank of England’s Covid Corporation Financing Facility (CCFF) will have enough funding to help them meet their cashflow needs during the pandemic.

Following on from discussions with lenders and business groups, the expanded loans will be available from 26 May 2020.

John Glen, the Economic Secretary to the Treasury, said:

“We’re determined to support businesses of all sizes throughout this crisis and our loans and guarantees have already provided over £32 billion to thousands of firms.

Today we’re increasing the maximum loan to £200 million to make sure companies get the help they need.

Businesses have benefitted from over £32 billion in loans and guarantees to support their cashflow during the crisis. This includes 268,000 Bounce Back Loans worth £8.3 billion, 36,000 loans worth over £6 billion through the Coronavirus Business Interruption Loan Scheme, and £359 million through the Coronavirus Large Business Interruption Loan Scheme, alongside £18.7 billion through the CCFF.

Companies borrowing more than £50 million 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.

These restrictions will also apply to CCFF participants that wish to borrow money beyond 12 months from today. This will ensure that the money is used to keep the company going through the crisis. The Bank will also publish a list of companies who have benefitted under CCFF on 4 June.”

Borrowers who fall under CLBILS will now be able to borrow up to 25% of their turnover, up to a maximum of £200 million.

Some lenders may wish to offer larger loans. If this is the case, these larger loans will need to undergo further accreditation checks.

 Some restrictions will apply, including:

  • Claimants cannot make any dividend payments
  • Claimants must agree any share buybacks
  • Claimants cannot pay any cash bonuses or award any pay rises to senior management (including  the board) except when they were declared prior to the CLBILS loan was taken out, if they are in keeping with similar payments made in the preceding 12 months and there is no material negative impact on the borrower’s ability to repay the loan

The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.