CLBILS: Treasury beefs up big business loan scheme

20 May 2020: the government has increased the maximum available under the Coronavirus Large Business Interruption Loans Scheme to £200m as part of a raft of changes to the support measure.

 HM Treasury has confirmed an expansion to the Coronavirus Large Business Interruption Loan Scheme (CLBILS), increasing the maximum loan size available from £50m to £200m.

The move is an attempt to ensure large firms which do not qualify for the Bank of England’s COVID Corporate Financing Facility (CCFF) are still able to meet cashflow needs during the ongoing crisis.

The expanded loans will be available from 26 May, with CLBILS borrowers able to borrow up to 25% of turnover, up to a maximum of £200m.

First introduced in April, CLBILS is designed to support larger businesses with an annual turnover of more than £45m. According to the latest figures from UK Finance, so far 86 mid-sized and larger UK businesses have received financial support through the CLBIL scheme, with total lending of £590m.

Corporate and social responsibility

The government also announced that companies borrowing more than £50m 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 previously agreed.

These restrictions will also apply to CCFF participants wishing to borrow money beyond 12 months (from 19 May) – a move designed to ensure the money is used to keep the company going through the crisis. The Bank will also publish a list of companies benefitting under CCFF on 4 June.

Commenting on the changes, ICAEW Chief Executive Michael Izza said that ministers were “right to review” how it is operating. 

“Increasing the maximum loan size available under the scheme is a sensible move which should make it attractive to more businesses,” said Izza. “Bids for these larger loans will be subject to a significant level of scrutiny so companies should seek advice to ensure their applications have the best chance of being accepted.

“The restrictions on eligibility, ownership, dividends and executive pay may dampen enthusiasm in some quarters,” he continued, “but I think it is fair that businesses which benefit from loans backed by public money should be expected to demonstrate corporate and social responsibility. But good behaviour shouldn’t be just for crises: this should set the tone for how companies conduct themselves more widely in the future”.