The government has expanded its £330bn coronavirus loan scheme to cover all financially viable UK businesses regardless of size.
The Coronavirus Large Business Interruption Loans Scheme (CLBILS) will allow companies with a turnover of more than £45 million to apply for up to £25 million of finance.
Firms with a turnover of more than £250 million can apply for up to £50m.
The government will underwrite 80 per cent of all loans, with finance available from a number of accredited lenders.
The scheme will be rolled out on Monday to complement the Coronavirus Business Interruption Loan Scheme (CBILS), which provides loans for small-to-medium-sized businesses with turnover of under £45m.
Chancellor Rishi Sunak said: “I want to ensure that no viable business slips through our safety net of support as we help protect jobs and the economy.”
There had been concern in some quarters, prior to today’s announcement, that many companies were in the so-called “stranded middle” and not eligible for government support.
The government announced CBILS to cater for businesses with turnover of under £45m, while very large investment grade companies could access the Bank of England’s (BoE) coronavirus bond-buying programme.
British Chamber of Commerce director general Adam Marshall said today’s announcement filled “an important gap in government support” and “could make a real difference to medium-sized and larger-firms navigating challenging circumstances”.
Chief CBI economist Rain Newton-Smith added: “This scheme is clearly targeted at helping several thousand mid-tier firms, rather than those already up and running for small and larger businesses.
“What’s essential now is to get the loans flowing as smoothly and swiftly as possible to those businesses in need.”
The government’s existing loan scheme has come into some criticism for not giving businesses access to loans at a quick enough pace.
As of yesterday, 6,020 loans worth £1.1bn had been given to small and medium-sized businesses through CBILS.
Swiss banks, in comparison, managed to hand out £12.4bn to more than 75,000 businesses in just one week of its equivalent loan scheme.
Stephen Jones, chief executive of banking lobby group UK Finance, yesterday said Swiss banks were lending much faster because its government was underwriting 100 per cent of all loans, instead of 80 per cent like in the UK.
This means the government will step in to pay back an entire loan if businesses are unable to do so.
Jones said this could be an option in the UK for smaller businesses, but that if the government begins to guarantee 100 per cent of loans for all businesses then it may lead to reckless lending.