Borrowing limit to be increased for the Coronavirus Large Business Interruption Loan Scheme
Key Contact: Christian Farrow
Author: Chris Doherty
The Government has announced proposals to extend the Coronavirus Large Business Interruption Loan Scheme (CLBILS) by raising the borrowing limit. Currently, eligible businesses with turnover of more than £45 million per year can apply for up to £25 million of finance. Firms with a turnover of more than £250 million can apply for up to £50 million. Under the extended scheme, firms will be able to borrow up to 25% of their turnover to a limit of £200 million.
The expanded scheme will be made available from Tuesday 26 May 2020.
Full scheme details can be found on our Financial Support Guide for Businesses.
Companies that borrow over £50 million under the extended CLBIS scheme will be banned from making any dividend payments other than those that have already been declared, and must agree not to carry out any share buybacks until their loan has been repaid. Cash bonuses, and pay rises to senior management (including the board) will also be banned for that period except where they:
- were declared before the loan was taken out;
- are in keeping with similar payments made in the preceding 12 months; and
- do not have a material negative impact on the borrower’s ability to repay the loan.
Government publishes Covid support scheme figures
The Government has provided figures on the uptake of funding under the Treasury’s various Coronavirus support schemes.
The Bounce Back Loan Scheme, which offers loans of up to £50,000 to small and medium sized businesses, has been particularly popular – 464,393 loans worth £14.18 billion have already been approved.
Uptake for the Coronavirus Business Interruption Loan Scheme (CBILS) and the CLBILS has been more tentative, with 40,564 CBILS loans worth £7.25 billion and 86 CLBILS loans worth £0.59 billion having been approved so far.
8 million jobs have now been furloughed under the Coronavirus Job Retention Scheme, with £11.1 billion having been claimed by employers. 2 million Self-employment Income Support claims have also been made, worth £6.1 billion.
For more information on any of the points raised, please contact our corporate team.