By Andy Bruce
LONDON (Reuters) – Britain will allow more large businesses to apply for government funds, finance minister Rishi Sunak announced on Thursday, after many risked being left to collapse while the coronavirus outbreak tears through the economy.
All companies with revenue of more than 45 million pounds ($56 million) will be able to apply for the Coronavirus Large Business Interruption Loan Scheme when it launches on Monday, the finance ministry said.
Previously, the scheme excluded companies with revenue of more than 500 million pounds because the government had hoped that big firms would be covered by a separate Bank of England programme to buy their commercial paper.
But that scheme helps only companies that have an investment-grade credit rating, or the equivalent in terms of financial health. As a result, many viable large firms were excluded from the government’s financial help.
Britain’s government has been scrambling to upgrade its unprecedented measures to reduce the scale of the collapse underway in the world’s fifth-largest economy.
A survey this week from the Office for National Statistics showed 25% of businesses had temporarily closed or paused trading since the lockdown.
“I want to ensure that no viable business slips through our safety net of support as we help protect jobs and the economy. That is why we are expanding this generous scheme for larger firms,” Sunak said in a statement.
The expanded scheme is part of a 330 billion-pound loan guarantee programme that Sunak announced last month. Banks report a big backlog of applications.
Bank of England data, collected from March 2-20, showed lenders expect the biggest rise in business borrowing since the survey began in 2007 but for demand for new mortgages to fall by the most on record as the housing market freezes up.
Companies with turnover of more than 250 million pounds will be allowed to borrow up to 50 million pounds from lenders, up from 25 million pounds previously, the finance ministry said on Thursday.
“These changes fill an important gap in government support, and could make a real difference to medium-sized and larger-firms navigating challenging circumstances,” Adam Marshall, director general of the British Chambers of Commerce, said.
Britain’s budget forecasters say the economy could be on track for an unprecedented 35% decline in the April-June period.
Even if the lockdown eases and growth rebounds, annual output could still fall 13% in 2020, the biggest annual decline in over 300 years.
(Reporting by Andy Bruce; editing by William James)