26 May

The Government announced on 17th  March 2020 that it had agreed with the Bank of England (the Bank) to support larger companies which do not qualify for the other Covid-19 measures, such as the Business Interruption Loan Scheme. The 

Under the Covid Corporate Financing Facility (CCFF), the Bank of England buys 'Commercial Paper'*, using central bank reserves, to provide short term debt for larger companies in order to support their business, if they have been affected by a short-term funding squeeze because of Covid-19.

This is aimed at helping these companies finance their short-term liabilities. It will also support the UK's corporate finance markets overall and ease the supply of credit to business.

The Bank’s intention is for the Facility to operate for an initial period of 12 months. The Bank will provide 6 months’ notice of the withdrawal of the Facility.

Scheme Eligibility 

  • UK incorporated companies, including those with foreign-incorporated parents and with a genuine business in the UK, will normally be regarded as meeting this requirement  
  • Banks, building societies, insurance companies and other financial sector entities regulated by the Bank of England or the Financial Conduct Authority will not be eligible
  • The Bank will require such issuers to sign a confidentiality agreement
  • In order to make use of the facility, corporates should contact the appropriate desk as shown on UK-finance's website.

Further details of the Scheme are on the Bank's website.

* Commercial paper, in the global financial market, is an unsecured promissory note with a fixed maturity of rarely more than 270 days. 

The Chancellor, the Governor of the Bank of England, and the CEO of the FCA wrote jointly on 25th March to the CEOs of the UK Banks on the subject of COVID-19 and bank lending, saying that the priority for "..banks, building societies, government and the financial authorities- should now be to take all action necessary to ensure that the benefits of the [Government's support measures]..are passed through to businesses and consumers." 

By the publications team at: Contracts-Direct.com

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