The government has quadrupled the levels of loans available to Britain’s biggest companies to a maximum of £200 million.
The support available through a Coronavirus Large Business Interruption Loan (CLBIL) had previously been set at £50 million, but the new loans will be available from next week.
But to qualify the firms must agree not to pay dividends and ‘exercise restraint’ on pay for their top employees which is taken to mean no bonuses for top executives ‘to ensure the money is used to keep the company going through the crisis’.
The Treasury announced the change had been made to ensure firms which did not qualify for the Covid Corporate Financing Facility (CCFF) – a scheme allowing large companies to issue what is known as commercial paper which gives access to special government funding which lasts no longer than a year.
It is designed to ensure they have enough finance to meet their cashflow needs during the pandemic.
John Glen, the Economic Secretary to the Treasury, said: “We’re determined to support businesses of all sizes throughout this crisis and our loans and guarantees have already provided over £32 billion to thousands of firms.”
The Treasury said British business has had a massive amount of support during the crisis.
This includes 268,000 Bounce Back Loans worth £8.3 billion, 36,000 loans worth over £6 billion through the Coronavirus Business Interruption Loan (CBIL) scheme, a further £359 million through the Coronavirus Large Business Interruption Loan (CLBIL) and £18.7 billion through CCFF.
All of the schemes are temporary, but remain on-going.
A Treasury statement also revealed that 8 million jobs have been furloughed through the Job Retention Scheme which allows firms to keep employees in a job with the government paying 80% of their salaries.
More than 2 million self-employed people have applied for one-off grants to cover 80% of their average three month profit.
Chancellor of the Exchequer Rishi Sunak said: “Our plan to support businesses and individuals is one of the most comprehensive in the world.
As these figures show, we are currently supporting millions of workers and businesses through these tough times so we can recover as quickly as possible.”
Stephen Jones, CEO of UK Finance, said: “The banking and finance industry is committed to helping businesses get through these tough times, with over £22 billion of lending provided to almost half a million businesses through government-backed schemes so far.
“Banks stand ready to support businesses large and small, and the changes announced by HM Treasury means firms can access loans from £2,000 to £200 million through the coronavirus loan schemes.
“These are just one part of a range of measures from the industry available to businesses including extended overdrafts, capital repayment holidays and asset-based finance.
A debt – not a grant
“It’s important to remember that any lending provided under government-backed schemes is a debt not a grant, and so firms should carefully consider their ability to repay before applying.”