The government will extend a loan scheme to help mid-sized and larger businesses through the coronavirus pandemic following concerns that many were unable to access support.
Chancellor Rishi Sunak said on Thursday night that companies with a turnover of more than £45m will be able to access up to £25m of government-backed finance.
Businesses turning over of £250m or more can borrow up to £50m under the Coronavirus Large Business Interruption Loan Scheme (CLBILS) which will launch on Monday.
The move is designed to help companies that were too large to access government-backed loans already announced for small firms, but were not able to apply for funding from the Bank of England.
Companies including Greggs and EasyJet have secured borrowing facilities from the Bank of England’s Covid Corporate Financing Facility (CCFF), but other large firms who were not “investment grade” have been unable to do so.
Mr Sunak, said: “I want to ensure that no viable business slips through our safety net of support as we help protect jobs and the economy. That is why we are expanding this generous scheme for larger firms.
“This is a national effort and we’ll continue to work with the financial services sector to ensure that our £330bn of government support, through loans and guarantees, reaches as many businesses in need as possible.”
Ministers have made clear to banks that they want them to lend quickly to any viable business affected by coronavirus that needs funding.
Figures released this week by the banks’ lobbying group UK Finance showed that only 6,020 loans totalling £1.1bn had been approved for small businesses under CBILS, though the number had doubled since last week.
Around one in five applications have been approved so far but many small firms say they have enquired and decided not to apply or been told by their bank that they are not eligible.
Some small businesses have called for the government to increase its backing for the loans from 80 per cent of banks’ losses if borrowers default, to 100 per cent.
The new extended scheme for larger businesses will operate in a similar way to the existing one with the government covering 80 per cent of any losses.
Business Secretary Alok Sharma added: “Coronavirus has struck a heavy blow against businesses of all sizes across the UK.
“Expanding this scheme will provide larger firms with the support they need during the pandemic, helping to provide job security to thousands of people and protect our economy.”
With the lockdown extension stretching for another three weeks at least, businesses are keen to ensure they can remain solvent until the economy can return to normal.