A NEW business finance council has been set up by the government, to support small- and medium-sized enterprises (SMEs) ahead of Brexit.
The UK’s Department for Business, Energy and Industrial Strategy (BEIS) and the Treasury on Thursday announced the creation of the new business finance council after a meeting with commercial lenders, including peer-to-peer platform Funding Circle.
Business secretary Andrea Leadsom and Economic Secretary to the Treasury John Glen will co-chair the council. They were joined at the roundtable meeting by Michael Gove, chancellor of the Duchy of Lancaster, and Kelly Tolhurst, small business minister.
The new council will also include executives from the UK’s leading banks and alternative lenders, the BEIS said.
Thursday’s meeting took place with representatives from financial services trade body UK Finance, the state-backed British Business Bank (BBB) and the following lenders: Barclays, Bibby Financial Services, Close Brothers, CYBG / Virgin Money, Funding Circle, HSBC, Lloyds, Metro Bank, RBS, Santander, Secure Trust Bank, Shawbrook and TSB.
The business finance council will aim to identify and address any barriers faced by SMEs in garnering the finance they need, in particular working capital and finance for investment. It will also provide an opportunity for lenders to demonstrate they are committed to supporting their business customers, the BEIS said.
“Lenders must empower their SME customers to seize the huge variety of opportunities that lie ahead as we leave the EU on 31 October,” Leadsom said. “Our new business finance council will bring together key players, ensuring that finance continues to flow to our brilliant British businesses so they can do just that.”
“Our financial system is strong and banks have the capacity to lend. I would urge lenders to take advantage of the support on offer from our fantastic British Business Bank (BBB).”
It comes only days since chancellor Sajid Javid was told that SMEs are not properly prepared for the effects of the UK crashing out of the EU without a deal.
“SMEs are crucial to the economy and I want to make sure they are fully prepared as we get ready to leave the EU,” Glen said. “It’s vital that businesses engage with their lenders ahead of Brexit and the new business finance council will ensure government, banks and other lenders work together to help SMEs access the finance they need.”
Although SMEs appear to have been able to continue accessing finance despite the ongoing political uncertainty there are concerns that in extreme circumstances they could see their access to capital stunted.
The BEIS said that £1.3bn is available to lenders in guarantee schemes through the government-owned BBB. Leadsom urged businesses to make the most of this support, enabling their SME customers to invest in capital, increase export capabilities and to manage cashflow.
The BBB, created in the wake of the 2008 financial crisis, has a guarantee scheme in place – called Enable – with capacity to lend around £1bn to SMEs in the event of a market shock.
The BBB also offers the Enterprise Finance Guarantee with £300m of capacity remaining to support SME lending. The guarantee structure facilitates lending to viable smaller businesses that lack sufficient security against which to borrow, providing additional comfort to lenders.