Coronavirus: Treasury grants loans to larger companies

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Rishi Sunak

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Loans to all medium and large companies will now be included in the government’s £ 330 billion coronavirus support program, the Treasury said.

All viable businesses with a turnover of more than £ 45 million will be able to apply for government-supported support, including those that absorb more than £ 500 million.

Programs for small businesses and larger businesses are already in place.

Industry groups welcomed the move.

Businesses with sales in excess of £ 500 million were not originally eligible for the Coronavirus Large Business Interruption Loan Program, which will launch on Monday.

The program, which will be part of £ 330 billion to support the UK economy, will allow companies with sales over £ 45 million to apply for up to £ 25 million in bank financing .

The government will guarantee 80% of these bank loans.

Chancellor Rishi Sunak said, “I want to make sure that no viable business gets through our safety net as we help protect jobs and the economy. This is why we are expanding this generous program for large companies.

“This is a national effort and we will continue to work with the financial services sector to ensure that our £ 330 billion government support through loans and guarantees reaches as many companies in need as possible. “

Business Secretary Alok Sharma said, “Coronavirus has dealt a severe blow to businesses of all sizes across the UK. Expanding this program will provide big business with the support they need during the pandemic, helping to ensure job security for thousands and protect our economy. “

The program is part of government efforts to help keep the UK economy afloat as it is battered by the effects of the coronavirus pandemic.

Small businesses may be eligible for the Coronavirus business interruption loan program.

However, British chambers of commerce have said that so far only 2% of British businesses have obtained the loans.

And some small businesses that claim to be viable have been unable to get help.

The government has also recognized that the small business system needs to work faster.

Other government initiatives designed to help businesses include the Coronavirus Job Retention Scheme, which covers 80% of workers’ wages; tax deferrals; cash grants; and cover the cost of statutory sickness benefit.

Larger companies could get loans from the Bank of England through the Covid Corporate Financing Facility.

“Fill a gap”

Business pressure groups have welcomed the government’s announcement of assistance for medium and large businesses.

Rain Newton-Smith, chief economist at the IWC, said: “These measures announced by the Chancellor will go a long way in supporting mid-sized businesses, some of which are the UK’s largest and most iconic regional employers.

“This program is clearly aimed at helping several thousand medium-sized businesses, rather than those already in place for small and large businesses. “

Adam Marshall, managing director of the British chambers of commerce, said the changes “fill a significant gap in government support and could make a real difference for medium and large businesses going through difficult times.”

“It is now crucial to ensure that this improved support reaches businesses in difficulty as quickly as possible,” he said.

Stephen Phipson, Managing Director of Make UK, said: “The situation remains fluid and, as we assess the details, we will continue to work closely with the Treasury to ensure that the companies that need help can open the tap when needed. “

And Jonathan Geldart, director general of the Institute of Directors, said, “The government deserves credit for showing its willingness to continue to adapt its response to coronaviruses. “

Governments and institutions around the world have worked to try to cushion economies from the effects of the coronavirus crisis.

For example, last week the European Union agreed to a € 500 billion bailout for European countries hit hard by the pandemic. In March, the IMF announced $ 50 billion (£ 39 billion) in support for countries affected by coronavirus, and the United States adopted a $ 2 billion disaster assistance bill.

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