More small businesses will be able to access loans of up to £5 million under the government Coronavirus Business Interruption Loan Scheme (CBILS).
Changes to EU state aid rules following industry lobbying means that the Covid-19 rescue loan scheme is being expanded.
The new measure could provide a lifeline to many struggling travel businesses.
Businesses classed as ‘undertakings in difficulty’ were previously unable to access CBILS because of EU rules.
‘Undertakings in difficulty’ are usually businesses with high levels of debt and accumulated losses.
However, firms in this category and which have fewer than 50 employees and a turnover of less than £9 million can apply to CBILS from today (Thursday), according to the Treasury.
The government now expects lenders to implement the changes “to ensure more businesses are receiving support”.
More than 57,000 businesses have so far gained £12.6 billion of support.
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 added: “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.”
CBI head of financial services policy Chris Wilford said: “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.”
Michael Moore, director general of the British Private Equity & Venture Capital Association, said: “The BVCA welcomes the changes announced today as these will benefit many small businesses nationwide backed by private equity and venture capital.
“These businesses have strong growth prospects and it is right that the undertaking in difficulty definition was amended to take account of their value to the economy.”
In a separate government announcement, small and medium sized businesses in England will have access to grants of between £1,000 – £5,000 to help them access new technology and other equipment as well as professional, legal, financial or other advice to help them “get back on track”.
The government is providing £20 million in new funding to help smaller firms recover from the pandemic
The move builds on a £10 million package announced earlier this month to help to kick-start the tourism industry and support the visitor economy.
