The scope of the Coronavirus Large Business Interruption Loan Scheme (CLBILS) is to be extended from 26 May 2020. The maximum loan size will be increased from £50 million to £200 million. Larger businesses will be able to benefit from loans up to the lower of 25% of turnover or £200m. The changes are expected to go live on 26 May and full details are expected to be made available on that date.
This increase will help ensure those large firms which do not qualify for the Bank of England’s Covid Corporate Financing Facility (CCFF) have enough finance to meet cashflow needs during the outbreak.
Companies borrowing more than £50 million through the 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 also apply to CCFF participants who wish to borrow money beyond 12 months, effective 19 May 2020.
Under the CBILS, the government provides commercial lenders with an 80% partial guarantee on individual loans for businesses that would be otherwise unable to access the finance they need at this critical time.
Personal guarantees of any form will not be taken for facilities below £250,000. For facilities of £250,000 and over, claims on personal guarantees cannot exceed 20% of losses after all other recoveries have been applied. The CLBILS currently supports a range of finance products including short term loans, overdrafts, invoice finance and asset finance.
To date, the government has provided loans of £359 million through the CLBILS and £18.7 billion through the CCFF.