Coronavirus loan scheme expanded to more businesses

The list of small businesses that can apply for assistance under the Government-backed Coronavirus Business Interruption Loan Scheme (CBILS) was significantly expanded on the 30th July 2020 to include all firms “in difficulty”.

The expansion of the CBILS came into effect as official figures revealed that the scheme has now benefitted more than 57,000 businesses, delivering £12.6 billion in affordable finance.

Initially under the scheme, businesses classed as “undertakings in difficulty” could not access the CBILS due to EU State Aid rules. The new rules will align the CBILS with the Bounce Back Loans (BBL) scheme, which already allows businesses in difficulty to access finance.

Businesses defined as being “in difficulty” usually find it hard to source finance because they are considered high-risk with “high levels of debt and accumulated losses”, however, the changes to the scheme ensure that any business in this category with fewer than 50 employees and a turnover of less than £9 million can apply for a CBILS loan, providing they are not insolvent and are capable of being rescued.

Speaking in support of the changes, Chris Wilford, Head of Financial Services Policy at the Confederation of British Industry (CBI) said: “This is an important step that will help more businesses get the critical support they need. 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.”

If you have previously been refused a loan under the CBILS, have questions about the application process or if you would like assistance in making an application for finance under the expanded scheme please get in touch with our experienced corporate team.

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Maung Aye
Maung is a partner in our Corporate and Commercial department. He joined Mackrell.Solicitors following corporate law positions in London and in a leading regional firm in Essex. Maung read European Legal Studies at Lancaster University and the Università degli Studi di Trento and is a fluent Italian speaker.