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£100m of Government-backed finance for Carillion’s SME creditors

The state-owned British Business Bank will support a scheme for small businesses which may not otherwise have the security needed for conventional bank lending, using its Enterprise Finance Guarantee (EFG) programme

More than 40 accredited lenders provide finance to their SME customers under the EFG scheme. Business Secretary Greg Clark has written to them to draw their attention to this additional support and asked them to ensure that they are actively supporting SME businesses in Carillion’s supply chain.

Accredited EFG lenders are listed on the British Business Bank website.

The guarantees can be used to support overdraft borrowing and refinancing of existing debt, helping SMEs, including the chain of subcontractors to Carillion, who may not have sufficient assets as security to access conventional loans.

Several UK banks have also have also furthered their commitment to provide support to those affected, including personal banking customers concerned about overdraft, mortgage or credit card repayments, as well as further financial support for small businesses to provide 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.”

Managing director of trade body UK Finance Stephen Pegge said: “The enhancement of the Enterprise Finance Guarantee by the British Business Bank will help those facing temporary cash flow issues to access the finance they need to support their businesses through this period.

This package is in addition to the more than £200 million already announced by Lloyds Banking Group, HSBC and RBS.

The move follows the first meeting on 18 January of the taskforce established to monitor and advise on mitigating the impacts of Carillion’s liquidation on construction firms, particularly SMEs and those working in the sector.

It is estimated that Carillion owes around £1 billion to 30,000 businesses in its supply chain.

This post was written by: HortWeek