// Government revises Coronavirus Large Business Interruption Loan Scheme (CLBILS)
// Retailers could be banned from paying dividends or buying back shares under new plans
The government has reportedly considered banning companies which receive state-backed loans of up to £200 million from paying dividends or buying back shares under new plans.
Larger companies which access government-backed loans of up to £200 million face a ban on paying dividends, Sky News reported.
Ministers are currently finalising changes to the Coronavirus Large Business Interruption Loan Scheme (CLBILS) that would include prohibiting the distribution of capital to investors in companies which take on the loans.
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Meanwhile, corporate users of CLBILS are being encouraged by the government to demonstrate restraint when they make decisions about executive pay and bonuses.
Companies that are eligible for the CLBILS include FTSE-listed retailers.
The British Business Bank (BBB), which administers the various lending schemes introduced by the Treasury since March, is understood to have been briefed on the potential changes.
Many of the companies seeking money using CLBILS are privately owned businesses, although some are also listed on the London Stock Exchange.
Data published last week showed that only 59 companies had so far been lent money – a total of £359 million – under the scheme.
It is understood that if they go ahead, the CLBILS restrictions on dividends and share buybacks will apply only to loans made above the previous ceiling of £50 million.
Meanwhile, hundreds of major employers are expected to apply for CLBILS loans once the cap is lifted to £200 million.
Under the scheme, banks are accredited by the BBB to issue loans, with the government providing an 80 per cent guarantee.
Chancellor Rishi Sunak is expected to reveal the revised details to the Treasury’s emergency schemes during the early part of this week.