A package of support for businesses and employees affected by the liquidation of the construction company Carillion has been welcomed by the Business Secretary, Greg Clark.
The British Business Bank is to offer support to provide up to £100 million of lending to small firms that may not have the security necessary to access conventional bank lending. This will be achieved with the support of all major high street lenders, via the Enterprise Finance Guarantee Scheme.
The move is likely to benefit small enterprises, including the chain of subcontractors to Carillion, who may not have sufficient assets as security to access standard business loans. These guarantees can be used to support overdraft borrowing and the refinancing of existing debt.
Additionally, the country’s largest banks have extended their commitment to support affected companies, with UK Finance confirming additional support for personal banking customers concerned about overdraft, mortgage or credit card repayments, as well as further financial support for small businesses in the form of short-term relief to help keep them afloat.
Business Secretary Greg Clark said:
“We want to signal very clearly to small and medium-sized businesses who were owed money by Carillion that they will be supported to continue trading.
“The banks have responded to my request by agreeing to support businesses and individuals affected. This further guarantee will help those businesses who may not be able to provide the usual security for a loan.
“I will continue to work closely with business organisations, trade unions and banks to actively support those affected by Carillion’s insolvency.”
British Business Bank CEO Keith Morgan said:
“The Enterprise Finance Guarantee (EFG) is an important option for smaller businesses who need access to finance, but may not be able to meet a provider’s normal security requirements.
“To help in these exceptional circumstances, we have designed additional flexibility into EFG that could be particularly suitable for firms in the Carillion supply chain. We would encourage lenders to work with their customers to use these new flexibilities to meet their needs.”