An emergency loan scheme for larger businesses is set to launch on Monday, filling a funding gap for the mid-tier corporate sector.
The coronavirus large business interruption loan scheme (CLBILS), which was unveiled earlier this month by Chancellor Rishi Suank, provides loans of up to £25m to firms with an annual turnover of between £45m and £250m, and facilities of up to £50m for those businesses with a turnover of more than £250m.
This fills the gap between the coronavirus business interruption loan scheme (CBILS), which provides funding for smaller firms, and the coronavirus corporate financing facility for triple A credit rated large enterprises.
David Fleming, managing director, restructuring advisory at Duff & Phelps, previously told Peer2Peer Finance News that CLBILS addresses “a huge funding hole for the vital mid-tier market in the UK”.
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“The new coronavirus large business interruption loan scheme focuses on a relatively narrow area of the market, but one that is vitally important to the UK economy,” said Keith Morgan, chief executive of the British Business Bank.
“More finance for viable mid-sized and larger firms will help them protect jobs and be in a better position to resume normal business when the current pandemic subsides.”
The new CLBILS scheme will support term loans, revolving credit facilities (including overdrafts), invoice finance and asset finance facilities.
Existing CBILS lenders can seek expedited accreditations to become lenders under the CLBILS scheme, which provides a government guarantee of 80 per cent of the loans.
No personal guarantees are permitted for facilities under £250,000. For facilities of £250,000 and over, claims on personal guarantees cannot exceed 20 per cent of losses after all other recoveries have been applied.
“Banks and finance providers are committed to helping British businesses through these difficult times,” said Stephen Jones, chief executive of UK Finance.
“With over £1.1bn already lent to small and medium-sized firms through the CBIL scheme the launch of the new scheme for larger business will help to expand this support during these challenging economic conditions.
“Frontline staff across the industry are working tirelessly to deliver money to viable businesses as quickly as possible and providers will be working throughout the weekend to get this scheme up and running for Monday.”