Government-backed Covid-19 loans expanded to retailers in deep debt

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Government-backed loans expanded to retailers in financial trouble
Ministers and industry groups have been pushing for changes to the rules to allow small and independent retailers that are not insolvent to access the scheme.
// Retailers banned from government-backed loans because they were too deep in debt can now access CBILS
// They can borrow up to £5m if they have fewer than 50 employees & turn over below £9m a year
// The government also announced £20m of funding to help small retailers recover from the pandemic

Retailers and other businesses that were banned from government-backed loans because they were too deep in debt will now be able to tap into the Treasury’s coronavirus scheme, ministers have said.

Some retailers that were denied support under the Coronavirus Business Interruption Loan Scheme (CBILS) will now be able to borrow up to £5 million from their bank.

The businesses were classed as “undertakings in difficulty” last year – most often meaning that they had high levels of debt and accumulated losses.


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The restriction was put on the CBILS scheme due to EU state aid rules, which regulate what kind of support government can provide to private companies.

Ministers and industry groups have been pushing for changes to the rules to allow small and independent retailers that are not insolvent to access the scheme.

“We have stood by business throughout this crisis, and today’s announcement will mean that even more small firms will be able to access much-needed financial support,” small business minister Paul Scully said.

“Small businesses will play a vital role as we seek to recover our way of life and get the economy moving again, and it is essential we continue to support them through this difficult period.”

More than 57,000 businesses from all sectors have so far tapped in to the government-backed CBILS, taking out £12.6 billion in total.

The loans are provided by high street banks, but backed by an 80 per cent government guarantee – meaning the Treasury shoulders most of the risk should the business not be able to pay back what it borrowed.

Companies are eligible if they have fewer than 50 employees and turn over below £9 million a year.

“This is an important step that will help more businesses get the critical support they need,” the Confederation of British Industry’s (CBI) Chris Wilford said.

“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 now be saved. The CBI will continue to work with government on further measures for firms of all sizes.”

Shadow business secretary Ed Miliband said: “Any help in breaking down the obstacles to loans is welcome but this has all taken far too long with too many businesses left out in the cold.

“Time will tell whether this sorts out the growing backlog of CBILs loans.

“There also remain serious, unaddressed problems of loans for larger firms, CBILs, and growing evidence of firms being shut out of bounce-back loans unless they are an existing customer of a major high street bank.

“Every week that passes with these problems being allowed to continue puts at risk the future of businesses, the livelihoods of workers and the strength of our economy.”

The government also announced £20 million of funding to help small businesses recover from the coronavirus pandemic.

Small and medium-sized businesses, many of which are retailers, will have access to grants of between £1000 to £5000 to help them buy new technology and other equipment.

It is also expected to help them access professional, legal and financial advice as they recover.

The government said it would fully fund the support and there would be no obligation for businesses to contribute financially.

with PA Wires

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