Small businesses said lenders were putting the squeeze on out of pocket firms
Banks have moved to head off criticism they were putting the squeeze on suppliers caught up in the Carillion collapse by agreeing to introduce a raft of emergency measures to help them cope with being left out of pocket.
Small business leaders complained earlier that banks were tightening access to cashflow in an attempt to protect themselves from being exposed to subcontractors going bust.
Rudi Klein, the chief executive of the Specialist Engineering Contractors’ Group, has said some firms are just weeks away from going under with an estimated 30,000 businesses owed more than £1bn by the failed contractor.
He added: “Banks are already starting to apply pressure on subcontractor firms that worked for Carillion. Banks are getting anxious and trying to find out companies’ losses.”
But following meetings with business secretary Greg Clark (pictured), economic secretary to the Treasury John Glen and small business minister Andrew Griffiths banks have agreed to initiatives such as such as overdraft extensions, payment holidays and fee waivers “where appropriate”, to help those affected stay afloat.
Stephen Pegge, the managing director for commercial finance at trade group UK Finance said: “UK banks and the government are working closely to make sure the impact of the Carillion liquidation on SMEs in the supply chain is understood and managed in a way that best supports those in need of assistance.”
Banks represented at today’s meeting included Barclays, HSBC, Lloyds and state-backed RBS. Both HSBC and RBS were two of Carillion’s main bankers.
The news comes after liquidator PwC confirmed at a meeting with industry groups earlier today that subcontractors will not be paid for work up to Carillion’s collapse on Monday.