The Treasury has raised the amount mid-sized companies can borrow through the coronavirus loan scheme to £200m, up from £50m.
The changes to the coronavirus large business interruption loan scheme (CLBILS) come into force next week, ministers said.
The CLBILS scheme is targeted at mid-sized companies that do not qualify for the Bank of England’s corporate lending programme, because they do not have a credit rating.
It is aimed at firms that were described as “slipping through the cracks” when the Treasury launched its coronavirus loans schemes in March.
However, very little has been lent through the scheme compared to other programmes. Companies have received just £359m through CLBILS, which launched on 20 April.
In comparison, £8.3bn has been lent out to small firms through the “bounce-back” loan scheme which launched on 5 May.
The changes to CLBILS come after some companies such as Tata Steel complained that the £50m cap on loans was too low. They said they needed more cash to keep their operations going.
The Treasury said today that firms using CLBILS or the Bank’s coronavirus corporate financing facility “will be asked to agree to not pay dividends and to exercise restraint on senior pay”.
Suren Thiru, head of economics at the British Chambers of Commerce, said: “It is good to see the government continue to listen to business concerns and make improvements to existing schemes.”
“These important changes could make a real difference to larger firms in particular.”
The CLBILS scheme aims to help firms with turnover of above £45m, which is the upper limit to qualify for the smaller coronavirus business interruption loan scheme (CBILS).
Under CLBILS, companies with a turnover of more than £250m can apply for a loan worth £50m. From 26 May, companies will be able to borrow 25 per cent of their turnover or £200m, whichever is lower.
However, the changes to the scheme come with restrictions on firms. Borrowers will not be allowed to make any dividend payments or buy back their own shares. Executive pay and bonuses will also be limited.