The Government’s announcement that support for the “vital” mid-tier sector is now available for businesses with up to £500m turnover should be welcomed, according to Duff & Phelps.
The financial adviser that protects, restores and maximises value for clients, suggested the move, announced last week by Chancellor, Rishi Sunak, will address a “huge funding hole” for the UK’s mid-tier market.
Managing director, David Fleming, commented: “When assessing the Government’s recent announcements, there were initially two levels of support. For SMEs with a turnover of up to £45m, there was the Coronavirus Business Interruption Loan (CBIL) guarantee scheme. Then the Coronavirus Corporate Financing Facility (CFF) for triple A credit rated large enterprises, there was a promise to buy unlimited short-term IOUs.
“However, there was a huge gap between those businesses with a turnover of up to £45m and the listed multi-billion-pound, credit worthy corporate giants. The critical mid-tier UK corporate sector looked like it would fall between two stools.
“This new initiative will see the introduction of the Coronavirus Large Business Interruption Loan Scheme (CLBILS), ensuring a government guarantee of 80% to enable loans of up to £25m for firms with a turnover of between £45m and £500m, thus addressing what we believed was a huge funding hole for the vital mid-tier market in the UK.”
The Government also announced a ban on banks demanding personal guarantees on loans under £250,000, as well as a major expansion of the Coronavirus Business Interruption Loan Scheme (CBILS), to speed up access to loans for “viable” small businesses.
“Since the outbreak of Covid-19, we are continuing to assist companies with strategies in avoid insolvency,” Fleming added. “This could be help with Time To Pay arrangements with HMRC, the Coronavirus Business Payments Support Service or help and guidance on the furloughing of staff and the Coronavirus Job Retention Scheme.
“The challenge now for government is the speed at which many of these schemes are implemented, and how they reach UK businesses facing imminent cash flow difficulties.”
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