Large businesses will be able to borrow up to £200million as the Government has quadrupled the size of loans available, but those taking them up will have to stop paying dividends and limit executive pay and bonuses.
The Treasury said the taxpayer-backed loans made available to large companies under the Coronavirus Large Business Interruption Loan Scheme (CLBILS) will increase from the previous maximum of £50million.
From next Tuesday, companies will be able to borrow up to 25 per cent of their turnover, up to a maximum of £200million, under the scheme. However, firms which take up the loans will be prevented from doling out cash to investors.
Loans expansion: Large businesses will be able to borrow up to £200million from Tuesday
Companies will still be able to pay out bonuses or increase salaries of its executives if they had been arranged before taking out the loan or if they are in line with similar payments done in the previous 12 months.
If companies can prove that paying out bonuses will not have 'a material negative impact on the borrower's ability to repay the loan', then they can still do so.
The scheme, which was introduced last month by Chancellor Rishi Sunak, is for companies with a turnover of £45million or more.
It is aimed at those companies who are ineligible for the business interruption loan scheme for smaller firms and for the Bank of England's Covid Corporate Financing Facility, which has been accessed by very large firms, such as easyJet.
The loans are 80 per cent backed by the Government and require banks to do several checks on the borrowers. The Treasury said today that lenders who wish to offer larger loans will need to undergo further accreditation checks.
Banks have approved only 86 of such loans so far, for a total of £590million, according to the Treasury's latest data.
The restrictions on dividend payments, executive pay and share buybacks will also apply to very big companies applying to the Bank of England's Covid Corporate Financing Facility for over 12 months.
Economic Secretary to the Treasury John Glen said: 'We're determined to support businesses of all sizes throughout this crisis and our loans and guarantees have already provided over £32billion to thousands of firms.
'Today we're increasing the maximum loan to £200million to make sure companies get the help they need.'
Suren Thiru, head of economics at the British Chamber of Commerce, said: 'It is good to see the Government continue to listen to business concerns and make improvements to existing schemes.
'These important changes could make a real difference to larger firms in particular and, alongside the other lending support schemes, will help ensure that more businesses of all sizes get access to the finance they need to help weather this unprecedented economic storm.'
Firms struggling due to Covid-19 receive over £22bn in loans
UK banks have handed out more than £22billion to companies as part of the Government-backed loan schemes since the coronavirus shut down large parts of the country's economy.
Fast-track 'bounce back' loans, which are 100 per cent backed by the Government and are aimed at smaller firms, made up the largest slice of funding.
Nealry 465,000 business received bounce back loans worth £14.18billion so far.
The Coronavirus business interruption loan scheme has seen 40,564 loans worth £7.25billion approved, while the CLBILS only 86 loans worth £590million.
In total more than 580,000 businesses have applied for the bounce back loans, while 81,000 have asked for a CBILS loan, and 496 have sought a CLBILS.
Meanwhile, more than £11.1billion has been claimed to help keep staff on payrolls as part of the furlough scheme.
Eight million jobs have been furloughed under the Treasury's job retention scheme. Another two million self-employed people have claimed a combined £6.1billion in support, the Treasury said.