BoE Announces Updates to TFSME to Support Lending for SMEs
BoE announced further measures to ensure the Term Funding Scheme with additional incentives for Small and Medium-size Enterprises (TFSME) can continue to support lending to SMEs through the Bounce Back Loan Scheme (BBLS). In addition to the change announced in May, whereby banks will be able to extend the term of some TFSME funding from four to six years, BoE will allow TFSME participants to extend a part of their borrowings again, to a total term of up to ten years.
Participants will be able to extend the term of TFSME loans by up to a further four years at the point at which the existing six-year TFSME loans mature. The amount of TFSME funding that can be extended will be capped at the amount of BBLS lending on TFSME participants’ balance sheets at that point. TFSME documentation will be updated in due course to reflect this change and to provide further operational details. The TFSME was launched in March 2020 as part of the measures to respond to the economic shock from COVID-19. In May 2020, BoE announced that TFSME participants would be able to extend the term of some of their TFSME funding to align with the term of loans made through BBLS, which was set up to enable businesses to access finance more quickly during the COVID-19 outbreak.
Related Link: Notification
Keywords: Europe, UK, Banking, COVID-19, SME, BBLS, Term Funding Scheme, Credit Risk, Loan Guarantee, BoE
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