Changes allow more businesses to benefit from loan scheme
Changes to state aid rules mean that more small businesses can now benefit from loans of up to £5 million under the Coronavirus Business Interruption Loan Scheme (CBILS).
Previously businesses which were classed as ‘undertakings in difficulty’ were unable to access CBILS because of EU rules. However, as of Thursday, businesses in this category and which have fewer than 50 employees and a turnover of less than £9 million can apply to CBILS, the government has announced.
The changes were made as a result of UK government and industry lobbying, which sought to relax the restrictive rules in the European Temporary State Aid Framework to make sure that small businesses who are not insolvent or receiving rescue aid can benefit, enabling them to bounce back and kickstart the economy.
According to the government, the Treasury and the Small Business Minister have written to accredited lenders setting out their expectation that these changes will be implemented to ensure more businesses are receiving support.
"Our loan schemes have been a key part in supporting businesses enabling them to bounce back as we kick start the economy," said Economic Secretary to the Treasury, John Glen.
"I’m delighted that our work with the Commission has paid off so we can further support the smallest businesses."
Also commenting on the news, Small Business Minister, Paul Scully, said the changes will mean that even more small firms will be able to access much-needed financial support.
"Small businesses will play a vital role as we seek to recover our way of life and get the economy moving again, and it is essential we continue to support them through this difficult period," said Mr Scully.
To date, businesses have benefitted from £50 billon of government-backed support with over 57,000 firms drawing from CBILS. However, this number is now expected to increase given the changed criteria.
"This is an important step that will help more businesses get the critical support they need," said Chris Wilford, head of financial services policy at CBI.
He explained that these eligibility hurdles have been a real stumbling block for many firms across the UK throughout the crisis.
"These were put in place to avoid governments bailing out failing companies, but those rules were established in normal times.
"They have had a real impact on the ability of some high-growth firms and those with more complex structures being able to access the loan schemes. More jobs and livelihoods will be now be saved. The CBI will continue to work with government on further measures for firms of all sizes," concluded Mr Wilford.