The UK government will hold an emergency meeting with senior bankers in Westminster next Thursday to try to co-ordinate plans to limit the impact of a no-deal Brexit on small businesses.

Andrea Leadsom, the business secretary, Michael Gove, the minister in charge of no-deal preparations, and City minister John Glen are all expected to attend, along with executives from the country’s largest business lenders and industry group UK Finance, according to multiple people briefed on the meeting.

The government wants banks to commit not to immediately cut lending after the UK leaves the EU on October 31, according to one person briefed on the meeting agenda.

The meeting will also consider setting up dedicated funds to ensure that small and medium-sized companies have enough credit supply to deal with any disruption, and will encourage banks to help with broader government initiatives by, for example, directing customers toward government information services.

In return, lenders are pushing for the government to provide more support for companies that might be excluded from access to credit under banks’ standard risk criteria. One option proposed by banks is to extend the Enterprise Finance Guarantee, which provides a government guarantee on loans to businesses that do not have enough collateral to meet lenders’ normal requirements.

Most lenders have already started their own initiatives to help their business customers prepare for Brexit, such as providing credit to help companies pay for large volumes of supplies in advance.

READ  Fiat Chrysler to pay $40 million over inflated sales figures

However, several senior bankers complained to the Financial Times earlier this year that the previous government had ignored requests for more co-ordinated action before the original Brexit deadline in March.

Banks are confident that their own businesses are ready for Brexit, but the Federation of Small Businesses has warned that hundreds of thousands of smaller companies do not have the resources to prepare in the same way.

There are particular concerns that a disorderly exit could lead to a spike in collapses of otherwise-healthy businesses if temporary cash flow issues lead them to default on their loans.

UK Finance declined to comment on Friday. However, earlier this week it said that “the banking and finance industry has the capacity to support viable businesses whatever the outcome” of Brexit. The statement came after the government announced on Thursday a £10m fund for trade associations to train and advise their members on Brexit preparations.

The Department for Business, Energy and Industrial Strategy did not respond to a request for comment by publication time.



READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here