The Government is mulling setting up funds to ensure that small and medium-sized businesses have enough access to credit to weather a no-deal Brexit.
Business secretary Andrea Leadsom; Michael Gove, the minister in charge of no-deal preparations; and City minister John Glen are expected to meet senior bankers in Westminster on Thursday to discuss limiting the impact of a hard Brexit on small businesses, according to the Financial Times.
The Government is concerned about banks cutting lending to small business after the UK is due to leave the EU on October 31, according to one person briefed on the meeting agenda.
However, lenders are pushing for the Government to support companies that might be excluded from access to loans under banks’ standard risk criteria. They want the Government to extend the Enterprise Finance Guarantee on loans to businesses that do not have enough collateral to meet lenders’ normal requirements.
The Enterprise Finance Guarantee provides lenders with a Government-backed guarantee for up to 75pc of the outstanding balance of eligible facilities, potentially enabling a “no” credit decision from a lender to become a “yes”. It supports facilities of between £1,000 and £1.2m to smaller businesses that are viable but unable to obtain finance from their lender due to having inadequate security to meet the lender’s normal credit requirements.
Last week, the business secretary unveiled a £10m grant scheme for business organisations and trade associations to support businesses preparing for Brexit.
Craig Beaumont, Director of External Affairs at the Federation of Small Business said: “As an organisation representing 165,000 small firms and the self-employed in every local community across the UK, we welcome these funds that target small businesses. It is mission critical to the economy that they have the information they need, to prepare for Brexit.”
Business secretary Andrea Leadsom said: “The funding we are announcing today will mean business organisations from all sectors across the country can stand resolutely behind businesses large and small to support them in preparing for, and seizing the opportunities of, leaving the EU.”