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April 20, 2020updated 15 May 2020 4:16pm

UK poised to unveil CLBILS, a rescue scheme for ‘large’ SMEs

By Alejandro Gonzalez

A long-awaited emergency funding scheme for UK businesses in the “squeezed middle” – too big for SME loans but not big enough to be granted investment-grade status – will be unveiled by the government on 20 April.

In a statement, HM Treasury said mid-sized and larger UK businesses not eligible for existing government-backed schemes would be included in its £330bn support package for the economy.

The newly unveiled Coronavirus Large Business Interruption Loan Scheme (CLBILS) is a bigger-scale iteration of CBILS (unveiled last month and designed for SMEs with a turnover under £45m).

Both schemes will be administered by the government-owned British Business Bank (BBB) and will cover term loans, overdrafts, invoice finance and asset finance.

Under CLBILS, companies with a turnover of more than £45m will be able to apply for support, including those with a turnover above £500m.

The scheme will allow firms to apply for up to £25m of finance from BBB accredited lenders, which include banks and non-bank lenders. The government will guarantee 80% of lenders’ loans.

Companies with a turnover of more than £250m can borrow up to £50m from lenders.

According to the Financial Times, about 10,000 companies may fall within this group, including many listed companies in the FTSE 250 that cannot get an investment-grade rating to access the Bank of England’s commercial paper scheme, the Covid Corporate Financing Facility (CCFF).

Unlike the CBILS scheme for smaller companies, the CLBILS loans will carry an interest rate decided by banks, the FT reported.

Also, CLBILS will be of interest to private equity investors. Previously, lenders were treating PE-backed firms as a subsidiary of a larger group rather than as a separate entity, meaning they were not eligible under the government support schemes.

Rishi Sunak, the Chancellor of the Exchequer, said: “I want to ensure that no viable business slips through our safety net of support as we help protect jobs and the economy. That is why we are expanding this generous scheme for larger firms.

“This is a national effort and we’ll continue to work with the financial services sector to ensure that our £330bn of government support, through loans and guarantees, reaches as many businesses in need as possible.”

Alok Sharma, the business secretary, said: “Coronavirus has struck a heavy blow against businesses of all sizes across the UK. Expanding this scheme will provide larger firms with the support they need during the pandemic, helping to provide job security to thousands of people and protect our economy.

Keith Morgan, chief executive of the British Business Bank, said: “The new CLBILS focuses on a relatively narrow area of the market, but one that is vitally important to the UK economy.

“More finance for viable mid-sized and larger firms will help them protect jobs and be in a better position to resume normal business when the current pandemic subsides.”

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