The government has announced changes to the Coronavirus Large Business Interruption Loan Scheme (CLBILS) today including an increase of the borrowing limit from £50m to £200m.
However, firms who want to borrow more than £50m will face certain restrictions until the loan is repaid.
- The Bank of England will implement the restrictions on the scheme it runs as well as seeking a letter from firms who wish to borrow for more than a year, “addressed to HM Treasury that commits to showing restraint on the payment of dividends and other capital distributions and on senior pay”.
- Limiting dividends and cash bonuses to senior management (unless they were announced before applying for the government loan) and companies will be prohibited from share buybacks.
- From 4th June, a weekly list will be published of the companies who have accessed the Covid Corporate Financing Facility and how much they have borrowed.
- Companies will be able to borrow 25% of their turnover to a limit of £200m.
The Bank of England said, “These commitments are intended to create incentives for, and promote the ability of, businesses to repay their borrowings.”
The government also announced:
- 464,393 loans worth £14.18bn have been approved under the Bounce Back Loan Scheme, which allows small to medium-sized businesses to borrow up to £50,000.
- 40,564 loans worth £7.25bn have been approved through the Coronavirus Business Interruption Loan Scheme, where small to medium-sized companies can access funding up to £5m.