Banks in the UK have announced that they are planning a fund worth up to £15bn, which will be targeted at small firms that have been heavily hit by the COVID-19 pandemic.

Called the Business Growth Fund, it is backed by some of the largest banks in the world – including Lloyds, HSBC and Barclays. The fund is now set to be deployed to support UK small businesses that received one of the government’s coronavirus business interruption loans and are unable to repay this money due to debts caused by the pandemic and the lockdown.

The man in charge of the fund is Stephen Welton, an ex-banker for JP Morgan, and he is arguing that flexibility over post-lockdown small business debt will be crucial to prevent the crisis within the economy becoming a crisis for the banking sector as well, hence the targeted support being offered.

The promised £15bn of financial aid is set to partly come via the City of London, with hopes that this will cover roughly half of it. The fund’s backers are likely to seek government financing for the rest.

A spokesperson for the Federation of Small Businesses London stated that lots of smaller firms will have had to use debt finance to keep themselves afloat, but that they needed other options – for example, equity finance – to avoid debts ballooning further. Getting professional advice from a small business accountant in South Yorkshire or any other part of the country could help firms in this situation.