Large financial institutions in the U.K. are stepping in to help companies affected by the collapse of construction giant Carillion.
Reports in the BBC on Thursday (Jan. 18) said both RBS and Lloyds have created funds to provide financing to small businesses (SMBs) affected by the company’s liquidation, which has placed millions of dollars worth of supplier payments in jeopardy.
The publication said Lloyds created a $69 million fund, while RBS created one worth more than $104 million; both banks stopped providing services for Carillion after the government denied debt insurance for the company.
RBS said it would offer “a range of flexible options to support impacted small business customers in Carillion’s supply chain, providing payment holidays and assistance with their overdraft to help manage any short-term cash flow challenges.”
Similarly, Lloyds said it would provide support for SMBs in Carillion’s supply chain that “may now be experiencing financial difficulty.”
“Small businesses don’t normally have the cash reserves that larger businesses do, so any interruption to their cash flow can have a significant impact on their ability to survive,” said Jo Harris, Lloyds managing director of Retail Business Banking, according to the BBC. “By supporting our small business customers during this difficult time, we hope we can help as many businesses as possible to get back on an even keel as quickly as possible.”
Earlier this week, Secretary of State for Business, Energy and Industrial Strategy Greg Clark met with top banks to discuss how they could provide support for SMBs affected by the Carillion fallout. Afterwards, he said the banks expressed a willingness to provide “tailored support” for SMBs and repayment flexibility.
Some critics are calling out RBS for its role in Carillion’s collapse after reports surfaced that the bank placed stricter terms on its funding to the company days before liquidation. Doing so weakened Carillion’s cash position, reports in Reuters said.