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Law360, London (April 17, 2020, 12:43 PM BST ) More large businesses will be able to apply to the government for financial support after the Treasury said it is lifting the cap on its £330 billion ($410 billion) emergency coronavirus support package.
Chancellor Rishi Sunak announced Thursday that he plans to bring relief to businesses with annual turnovers of more than £45 million — which are stuck in what has become known as the "squeezed middle" — on the day that the U.K. lockdown was extended for at least another three weeks.
"I want to ensure that no viable business slips through our safety net of support as we help protect jobs and the economy," Sunak said. "That is why we are expanding this generous scheme for larger firms."
All viable companies with revenue of more than £45 million will be able to apply to the coronavirus large business interruption loan scheme for up to £25 million of finance from banks when it launches on April 20. Firms with turnover of more than £250 million will now be eligible for loans of up to £50 million.
Businesses with turnover greater than £500 million were initially not able to apply for the loan scheme, because the government had hoped they would be covered by a separate Bank of England program.
But the scheme helps only those companies that have an investment-grade credit rating or the equivalent measure of financial health, which meant that some businesses were excluded from access to help.
"Coronavirus has struck a heavy blow against businesses of all sizes across the U.K.," Alok Sharma, the business secretary, said. "Expanding this scheme will provide larger firms with the support they need during the pandemic, helping to provide job security to thousands of people and protect our economy.
The government will underwrite 80% of all loans. The larger loans will be available from Monday from banks that are accredited by the British Business Bank, a state-owned entity.
The scheme is part of the government's plan to keep businesses afloat during the coronavirus lockdown. Smaller businesses could qualify for support from the loan scheme, but critics say that, so far, many have been unable to secure help.
The British Chambers of Commerce, which represents businesses across the country, said this month that just one in 100 companies had successfully applied to the scheme, which provides loans of £5 million.
Banks have been banned from requesting personal guarantees for emergency loans under £250,000 to reduce financial risk for applicants. High street lenders came under fire for asking business owners to put their savings on the line to secure the emergency loans.
--Editing by Ed Harris.
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