Loss-mak­ing com­pa­nies can now tap into Covid life­line

The Daily Telegraph - Business - - Business - By Tom Rees

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.

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