The Government has backed a £100 million loan facility for small businesses threatened with insolvency following the Carillion collapse.
The construction giant was placed into compulsory liquidation earlier this year following a series of loss-making contracts, leaving suppliers and subcontractors with debts well into the millions of pounds.
Recent figures suggest that as many as 30,000 firms will be affected by late payments and cancelled contracts, with “17 to 18 per cent” expected to not make it through the next five years.
The loan facility, announced by the Government last week, will be supported by the British Business Bank and UK Finance and associated delivery partners, including all major high street lenders.
The £100 million support package will help small businesses which may not have sufficient assets as security to access conventional loans. These guarantees can be used to support overdraft borrowing and refinancing of existing debt.
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 added: “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.”