Coronavirus: UK banks draw up £15 billion support fund for small businesses struggling under lockdown

SMALL firms today welcomed a £15 billion support fund backed by UK banks to aid businesses struggling with debts.

The Business Growth Fund was founded in 2011 by big banks including Barclays, HSBC and Lloyds, and is run by former JP Morgan banker Stephen Welton.

Welton warns that a large number of businesses will fail in the fallout from Covid-19 and that unless there is some degree of debt flexibility an economic crisis could turn into a banking crisis.

The BGF scheme would aim to help firms that have taken a CBIL – a coronavirus business interruption loan – but are struggling with repayments.

A Federation of Small Businesses London spokesman said: “Many small firms across London have taken a significant financial hit as a result of the pandemic and a vast swathe will have turned to debt finance to support them.

"But it is important that we see alternative forms of finance such as equity finance being offered to small firms as many are informing us that they don’t want to store up more future debt. It is vital that we give small firms wider options at this time as it is not simply a case of one size of finance fits all.”

BGF will seek to raise perhaps £7.5 billion from the City with the rest to come from the government.