What are the main changes to Coronavirus Large Business Interruption Loan Scheme from 26 May 2020?

On 26 May the Government made a number of changes to Coronavirus Large Business Interruption Loan Scheme (CLBILS) designed to make the scheme more generous to businesses. Eligible borrowers can borrow up to a maximum facility of £200m. This replaced previous limits of up to £25m for businesses with group turnover up to £250m and £50m for businesses with higher turnover.
 
For facilities in excess of £50m some additional eligibility criteria apply, as discussed below.
Following the changes made with effect from 26 May 2020, do facilities in excess of £50m have additional eligibility criteria that apply to them?
 
For groups seeking facilities in aggregate in excess of £50m (the CLBILS variant announced on 19 May), the scheme’s eligibility requirements include some additional commitments from borrowers reflecting the additional commitment being made by Government:
 
Until the facility has been repaid in full, borrowers and members of their group cannot pay any cash bonuses to senior management, or award any pay rises to senior management except where such pay rise was (i) agreed in writing before the facility was taken out, or (ii) is in keeping with similar payments made in the preceding 12 months, and (iii) does not have a material negative impact on the borrower’s ability to repay the facility. The restriction does not need to apply to pay awards or cash bonuses to be paid to new members of senior management joining the group after the date of the facility but must apply to any subsequent cash bonuses or pay rises awarded to such persons after they have joined the group.
 
Until the facility has been repaid in full, the borrower must agree that it and each member of its group will not

1. declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its share capital (or any class of its share capital) or, if it is a partnership, any equivalent payment to its partners;
2. repay or distribute any dividend or share premium reserve;
3. pay or allow any member of its group to pay any management, advisory or other fee to or to the order of any of the shareholders (or if the borrower or such member of its group is a partnership, partners) of the borrower or such member of its group; or
4. redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so.

 
The restriction will not apply to any payment:

1. falling within the above which is paid by one member of the borrower’s group to another member of the borrower’s group (for the avoidance of doubt, excluding any payment to any partner enterprise or linked enterprise of the borrower that is a private equity or venture capital entity);
2. that is a de minimis share buyback from an employee (other than to a member of senior management) upon such employee retiring or ceasing to be employed by the group; or
3. of any dividend or distribution declared prior to the entry by the borrower into the facility.

 
Lenders wishing to offer CLBILS facilities for an amount greater than £50m will need additional accreditation. The lender will generally be expected to have permission to use the Internal Ratings Based (IRB) approach, approved for corporate lending at this scale.

Lenders wishing to offer CLBILS facilities for an amount, in aggregate, greater than £50m to any borrower or borrower group, will need to notify the British Business Bank in advance of agreeing any facility.