More small businesses can now benefit from Government-backed finance after the Coronavirus Business Interruption Loan Scheme (CBILS) was expanded to firms “in difficulty”.
The change comes as official figures revealed that the scheme has now been used over 57,000 times, delivering £12.6 billion in affordable finance.
Under previous rules, businesses classed as “undertakings in difficulty” could not access the CBILS due to EU State Aid rules.
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, changes today 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.
The new rules will align the CBILS with the Bounce Back Loans (BBL) scheme, which already allows businesses in difficulty to access finance.
Welcoming 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.”
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