CLBILS extended from £50 million to £200 million

CLBILS extended from £50 million to £200 million

Businesses will be able to benefit from larger loans under the Coronavirus Large Business Interruption Loan Scheme (CLBILS), the government announced today.

The maximum loan size available under the scheme will be increased from £50 million to £200 million to 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.

The expanded loans, which have been introduced following discussions with lenders and business groups, will be available from 26 May.

Further information on CLBILS can be found here and further information on CCFF can be found here.

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.

Further Information

– borrowers under CLBILS will be able to borrow up to 25% of turnover, up to a maximum of £200 million

– lenders who wish to offer larger loans will need to undergo further accreditation checks

The restrictions in place will include:

– Dividends: Borrowers cannot make any dividend payments

– Share buyback: Borrowers agree any share buybacks

– Executive pay: Borrowers cannot pay any cash bonuses or award any pay rises to senior management (including the board) except where they were a) declared before the CLBILS loan was taken out, b) is in keeping with similar payments made in the preceding 12 months, and c) does not have a material negative impact on the borrower’s ability to repay the loan.

Commenting on the extension of the CLBILS scheme, including extending the lending limit to £200m, British Chambers of Commerce Head of Economics Suren Thiru said:

“It is good to see the government continue to listen to business concerns and make improvements to existing schemes.

“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.”

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