Britain’s banking system has been urged to extend its lending despite the uncertain economic future created by the coronavirus pandemic.
The Financial Conduct Authority (FCA), Bank Of England and HM Treasury have written to businesses nationwide, urging them to extend their lending.
The letter said the priority for banks and building societies should be to pass on any benefits from government measures to businesses and consumers.
It emphasised that it is important that banks are willing to maintain and extend their lending to ensure that companies which had viable business models before the start of the crisis would still be viable once it’s over.
The letter said: “Continued communication and cooperation will be paramount over the coming weeks and months.
The Bank of England and FCA will be monitoring the situation closely and will be in regular contact to discuss developments and any issues emerging.
“You all have an important part to play in the UK response to Covid-19 and we know that you will rise to the challenge to support the economy and protect jobs.
“We welcome the action already taken by banks, with the support of the regulators, to offer help and flexibility to businesses and consumers.
“We also appreciate your efforts to ensure that any flexibilities extend to customers at this unprecedented time are recorded accurately so as to prevent an adverse impact on a customer’s credit file.”
The government has announced two main measures to help businesses stay open and viable.
For large firms there is the Covid Corporate Financing Facility (CCFF) which will provide help with problems regarding cash flows.
The Coronavirus Business Interruption Loan Scheme (CBILS) is now fully operational, offering government loans of up to £5 million.
The British Business Bank is overseeing the scheme and offering help to firms whose cashflow has been disrupted with the corresponding loss of revenue.
Lenders can offer the financial help in a variety of ways:
- Term Loans
- Invoice Finance
- Asset Finance