More retailers to benefit from government-backed Covid-19 loans

Published on: 31st July 2020

Some retailers that were denied support under the Coronavirus Business Interruption Loan Scheme (CBILS) can now borrow up to £5m from their bank.

Retailers coronavirus loans

Retailers and other businesses that originally did not qualify for government-backed loans due to high levels of debt will now be able to benefit from the Treasury’s coronavirus scheme, ministers have said.

Some retailers that were denied support under the Coronavirus Business Interruption Loan Scheme (CBILS) can now borrow up to £5m from their bank.

Those businesses were classed as “undertakings in difficulty” last year, meaning that they had high levels of debt and accumulated losses. The restriction was put on the CBILS scheme due to EU state aid rules, which determine the support that the government can provide to private companies.

Ministers and industry groups have been pushing for changes to the rules to allow small and independent retailers that are not insolvent to access the scheme.

“We have stood by business throughout this crisis, and this announcement will mean that even more small firms will be able to access much-needed financial support,” small business minister Paul Scully commented. “Small businesses will play a vital role as we seek to recover our way of life and get the economy moving again, and it is essential we continue to support them through this difficult period.”

More than 57,000 businesses from all sectors have so far utilised the government-backed CBILS, claiming £12.6b in total. The loans are provided by high street banks and are supported by an 80% government guarantee, meaning the Treasury shoulders most of the risk, should the business not be able to pay back what it borrowed. Companies are eligible if they have fewer than 50 employees and turn over below £9m a year.

“Any help in breaking down the obstacles to loans is welcome but this has all taken far too long with too many businesses left out in the cold. Time will tell whether this sorts out the growing backlog of CBILS loans,” commented shadow business secretary Ed Miliband. “There also remain serious, unaddressed problems of loans for larger firms, and growing evidence of firms being shut out of bounce-back loans unless they are an existing customer of a major high street bank. Every week that passes with these problems being allowed to continue puts at risk the future of businesses, the livelihoods of workers and the strength of our economy.”

The government has also announced £20m of funding to help small businesses recover from the coronavirus pandemic. Small and medium-sized businesses will have access to grants of between £1000 to £5000, which should help them purchase new equipment and access professional, legal and financial advice as they recover. The government said it would fully fund the support and there would be no obligation for businesses to contribute financially.


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