"Today’s announcement will mean that even more small firms will be able to access much-needed financial support."
Changes to state aid rules mean that more small businesses can now benefit from loans of up to £5 million under the Coronavirus Business Interruption Loan Scheme (CBILS).
Previously businesses which were classed as ‘undertakings in difficulty’ were unable to access CBILS because of EU rules. From today, businesses in this category and which have fewer than 50 employees and a turnover of less than £9 million can apply to CBILS.
The Economic Secretary to the Treasury and the Small Business Minister have written to accredited lenders setting out their expectation that these changes will be implemented to ensure more businesses are receiving support.
Undertakings in difficulty are usually businesses with high levels of debt and accumulated losses.
The UK Government and industry groups have lobbied to relax the restrictive rules in the European Temporary State Aid Framework to make sure that small businesses who are not insolvent or receiving rescue aid can benefit.
Economic Secretary to the Treasury, John Glen, said: "Our loan schemes have been a key part in supporting businesses enabling them to bounce back as we kick start the economy. I’m delighted that our work with the Commission has paid off so we can further support the smallest businesses."
Small Business Minister, Paul Scully, commented: "We have stood by business throughout this crisis, and today’s announcement will mean that even more small firms will be able to access much-needed financial support.
"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."
Chris Wilford, head of financial services policy at the CBI, added: "This is an important step that will help more businesses get the critical support they need. These eligibility hurdles have been a real stumbling block for many firms across the UK throughout the crisis. These were put in place to avoid governments bailing out failing companies, but those rules were established in normal times.
"They have had a real impact on the ability of some high-growth firms and those with more complex structures being able to access the loan schemes. More jobs and livelihoods will be now be saved. The CBI will continue to work with government on further measures for firms of all sizes."