To ask Her Majesty's Government what progress they have made in discussions with the European Commission about amendments to the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak, adopted on 19 March, to permit small and medium enterprises whose capital is principally represented by long-term shareholders' loans but whose businesses were viable until the COVID-19 pandemic to apply for loans under the Coronavirus Business Interruption Loan Scheme; and whether they have raised in such discussions the case for permitting those enterprises to apply for such loans even if those businesses could be deemed as ‘undertakings in difficulty’ under EU State Aid rules.
Answered on
15 May 2020
Although the UK has left the EU, under the terms of the Withdrawal Agreement, the EU State Aid rules continue to apply in the UK until the end of the Transition Period. The State aid rules are a sole competence of the European Commission. The Commission has introduced some flexibilities into the rules to deal with the impacts of the Coronavirus, in the form of a Temporary Framework.
The Coronavirus Business Interruption Loan Scheme (CBILS) is a State Aid approved scheme under the European Commission’s Temporary State Aid Framework. Companies that do not pass the ‘undertaking in difficulty’ test are eligible for support, in recognition of the impact of Coronavirus, unless they were in difficulty on 31 December 2019, prior to the outbreak.