Rule Change Paves Way for PE-Backed Firms to Access U.K. Aid

(Bloomberg) --

Companies owned by private equity firms could become eligible to apply for U.K. emergency loan programs following a change to a key rule that prevented indebted businesses from accessing funds.

The state-owned British Business Bank said in a statement on Friday that firms don’t need to prove that they weren’t in financial difficulty at the end of 2019, and can have that assessment determined on the date they apply for the programs instead. This means that companies can now restructure their finances to qualify before making an application.

Private-equity backed firms in hospitality and other sectors struggled to access the emergency funding due to the “undertaking in difficulty” rule, which meant that many companies’ debt ratios were too high due to their financing structures.

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