fbpx
Advertisement

UK loan scheme to cover small businesses as EU relaxes state aid rules after UK lobbying

The European Commission has relaxed its European Temporary State Aid Framework rules so that small and micro businesses – meaning fewer than 50 employees and turnover less than £9 million – will be exempt from elements of the ‘undertaking in difficulty’ test. This is as a result of UK and industry lobbying, and means that small business  are now eligible for the Coronavirus Business Interruption Loan Scheme (CBILS). The CBILS scheme now entitles them to loans of up to £5 million.

Previously businesses which were classed as ‘undertakings in difficulty’ were unable to access CBILS because of EU rules. Undertakings in difficulty are usually businesses with high levels of debt and accumulated losses. From today, businesses in this category and which have fewer than 50 employees and a turnover of less than £9 million can apply to CBILS.

The Economic Secretary to the Treasury and the Small Business Minister have written to accredited lenders setting out their expectation that these changes will be implemented to ensure more businesses are receiving support.

Small Business Minister, Paul Scully, said:

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 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.

The government has already provided £50 billon support to small businesses through this scheme, with over 57,000 firms drawing from CBILS to date. This is in addition to the furlough scheme, over £10 billion of grants and tax deferrals.

Chris Wilford, Head of Financial Services Policy, CBI said:

This is an important step that will help more businesses get the critical support they need. 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 be now be saved. The CBI will continue to work with government on further measures for firms of all sizes.

Ed Miliband MP, Labour’s Shadow Business, Energy and Industrial Strategy Secretary, 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.”

BLOG COMMENTS POWERED BY DISQUS
Advertisement