CLBILS loan upped, but new restrictions come in

The government’s coronavirus loan scheme for large businesses has been increased from a maximum of £50m to £200m, but a raft of new restrictions have also been introduced around dividends, bonuses and executive pay.

Max CLBILS loan increased from previous limit of £50m
Max CLBILS loan increased from previous limit of £50m

This morning (19 May) HM Treasury announced that its Coronavirus Large Business Interruption Loan Scheme (CLBILS), designed to help bigger businesses, would be increased to a maximum loan size of £200m.

The new loans will be available from 26 May. Firms can borrow up to 25% of turnover, up to the £200m ceiling.

The scheme previously had two options: loans of up to £25m for firms with sales of between £45m-£250m; and loans of up to £50m for firms with sales of more than £250m.

The government said it would help large firms that do not qualify for the Bank of England’s Covid Corporate Financing Facility (CCFF) “have enough finance to meet cashflow needs during the outbreak”.

However, there are caveats in relation to future dividends, share buy-backs and bonuses.

HM Treasury stated: “Companies borrowing more than £50m through CLBILS will be subject to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan, including a ban on dividend payments and cash bonuses, except where they were previously agreed.

“These restrictions will also apply to CCFF participants that wish to borrow money beyond 12 months from today,” HM Treasury stated.

“This will ensure that the money is used to keep the company going through the crisis.”

Borrowers cannot make any dividend payments, the borrower needs to agree any share buy-backs, and with regard to executive pay borrowers “cannot pay any cash bonuses or award any pay rises to senior management (including the board)” – except where they were declared before the CLBILS loan was taken out, are in keeping with similar payments made in the preceding 12 months, and do not have a material negative impact on the borrower’s ability to repay the loan.

A list of companies that have benefited from the scheme is set to be published next month.

The Treasury also announced that more than £32bn in loans had been made so far via the various government-back schemes.

This included 268,000 Bounce Back Loans totalling £8.3bn; more than £6bn made up of 36,000 loans made via CBILS for SME companies, £359m via the large business scheme, and £18.7bn via the CCFF.


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