[co-author: Hyerin Park]
Earlier this month, we published a note outlining the key preliminary features of the UK Government-backed Coronavirus Large Business Interruption Loan Scheme (the "CLBILS"). Since then, and ahead of the CLBILS's launch on Monday (20 April), the Government has announced updates that expand the scheme's scope.
Under the eligibility requirements previously announced by the Government, businesses applying for the CLBILS needed to have an annual turnover of between £45 million and £500 million. The Government has now relaxed this criterion to allow all viable businesses with a turnover of more than £45 million, even those with a turnover of more than £500 million, to apply. The size of annual turnover will, however, determine the maximum value of the facility in relation to which the Government will guarantee 80% of the loan under the scheme, as below:
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Annual turnover
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Value of facility
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£45 million – £250 million
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Up to £25 million
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More than £250 million
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Up to £50 million
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For more details, please refer to the British Business Bank's website.
These updates are designed to ensure that "no viable business slips through" the Government's "safety net of support", and they have been welcomed by business lobby groups for being geared towards achieving this for mid-sized and larger UK businesses, which have been widely considered as being overlooked by the Government's Covid-19 financial support package.
The Government has confirmed that private equity-owned firms will be able to access the scheme and has promised to provide further clarification. The BVCA reported today that in a stakeholder call last night, the British Business Bank indicated that the changes would include removing the ‘grouping’ arrangements which had previously meant that many private equity-backed businesses could not access CLBILS support. These developments should go some way towards addressing concerns in the leveraged finance market that the Government is not undertaking enough action to support struggling portfolio businesses.
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