Loss-making companies can now tap into Covid lifeline
LOSS-MAKING firms have been given a boost in their battle to survive after the Treasury made it easier to access state-backed lifelines.
Previously, loss-making businesses were barred from getting help through the Government’s Coronavirus Business Interruption Loan Scheme (Cbils) due to Brussels state aid rules meant to stop public money from being used to prop up failing companies.
But European Union officials have now tweaked these rules in light of the coronavirus pandemic, allowing mandarins to draw up changes to the rescue scheme. The alterations will help fast-growing start-ups which lose cash because they are focused on growth.
Chris Wilford, head of financial services policy at the Confederation of British Industry, said: “More jobs and livelihoods will now be saved.”
Some £13bn of loans have been handed out to 57,000 firms under
‘As companies look to reopen and restart operations, cash will be tight, so it can’t come soon enough’
Cbils. This money is lent out by banks, but the taxpayer will cover 80pc of lenders’ losses if a borrower defaults. Businesses with fewer than 50 employees and turnover of less than £9m that were rejected for the loans will benefit from the changes.
Allie Renison, head of Europe and trade policy at the Institute of Directors, said: “As companies look to reopen and restart operations, cash will be tight, so it can’t come soon enough.”
Ministers have written to Cbils-accredited lenders urging them to offer the lifeline to companies which were previously rejected.
Business groups had complained that the previous Brussels rules disproportionately affected British firms, while the tech industry had warned the rules harmed its fast-growing companies.