Finance · 5 February 2018

British Business Bank offers £100m support package to firms affected by Carillion

Loans will be offered under the bank’s Enterprise Finance Guarantee programme

The British Business Bank (BBB) will provide a further £100m support package for small businesses and workers affected by the collapse of Carillion.

Through its delivery partners, which include the majority of major UK high street lenders, the development bank has said it will offer further funding to small firms that may not have enough assets as security to access traditional forms of bank lending.

The support package, which will be offered through the BBB’s Enterprise Finance Guarantee (EFG) scheme, will be of particular benefit to Carillion’s long chain of suppliers and subcontractors.

The guarantees issued to companies under the scheme can be used to support overdraft borrowing and refinancing of existing debt, the bank said.

CEO of the BBB, Keith Morgan, said: “The EFG scheme 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.”

The trade body UK Finance has also confirmed it will offer further support to workers affected by the Carillion collapse, providing advice on overdrafts, mortgage and credit card payments.

The new support package are in addition to the more than £200m already made in commitments from high street banks Lloyds, HSBC and RBS.
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Carillion collapse: Small firms call for project bank accounts to protect supply chains

Small businesses have urged the government to extend the use of project bank accounts for major public projects to protect firms against the risk of catastrophic market events like Carillion’s liquidation.

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Stephen Pegge, UK Finance’s managing director for commercial finance, said that it had become increasingly important to help underpin the cash flow of firms affected by Carillion’s liquidation on 15 January.

He added: “The enhancement of the EFG by the BBB will help those facing temporary cash flow issues to access the finance they need to support their businesses through this period.”

Welcoming further commitments from the BBB and UK Finance, business secretary Greg Clark said: “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.”

In the wake of Carillion’s collapse, Clark has been chairing regular meetings of a taskforce set up by the government to keep track of the impact the liquidation has had on small construction firms.

“I will continue to work closely with business organisations, trade unions and banks to actively support those affected by Carillion’s insolvency,” Clark went on to say.

“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.”

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ABOUT THE EXPERT

Fred Heritage is deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London. He previously worked as a reporter at Global Trade Review magazine.

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