Loan scheme revision may deliver dividend ban
It’s reported that ministers are considering plans that could see companies receiving state-backed loans under the Coronavirus Large Business Interruption Loan Scheme (CLBILS) banned from paying dividends or buying back shares.
Reform of the initiative that offers loans of up to £200m may also see firms urged to demonstrate restraint in regard to executive pay and bonuses. The restrictions on dividends and share buybacks would reportedly only apply to loans above £50m – the initiative’s previous ceiling. It is suggested that any change to CLBILS may be outlined alongside broader criteria for the COVID Corporate Financing Facility, which allows companies to issue short-term debt that is then bought by the Bank of England.
Sky News understands that the British Business Bank, which administers the lending schemes rolled out by the Treasury since the COVID-19 outbreak, has been briefed on the potential changes. The most recent data on C LBILS uptake shows 59 companies have been lent a combined £359m.