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Information and public services for the Island of Jersey

L'înformâtion et les sèrvices publyis pouor I'Île dé Jèrri

Business Disruption Loan Guarantee Scheme: Extension

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A decision made on 30 September 2021

Decision Reference: MD-TR-2021-0115

Decision Summary Title:

Business Disruption Loan Guarantee scheme extension

Date of Decision Summary:

30 September 2021

Decision Summary Author:

Associate Director, Financial Services

Decision Summary:

Public or Exempt?

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

n/a

Written Report

Title:

Business Disruption Loan Guarantee scheme – September 2021 extension

Date of Written Report:

30 September 2021

Written Report Author:

Associate Director, Financial Services

Written Report :

Public or Exempt?

Public

Subject: Extension of the Business Disruption Loan Guarantee Scheme

Decision(s): The Minister decided to extend the Business Disruption Loan Guarantee Scheme to 31 December 2021. The Minister also decided to extend the Scheme Maturity Date to 31 December 2027, permitting facilities with terms up to 6 years to be issued under the scheme.

 

Reason(s) for Decision:

 

The extension allows the scheme to be used until 31 December 2021, allowing businesses to borrow from banks participating in the scheme for an additional 3 months.

 

The BDLGS extension:

  • Continues to ensure that additional credit is available to those businesses which are considered viable but cannot be lent to on bank commercial terms;
  • Continues to ensure that exposure is limited to the caps in the Public Finances (Jersey) Law 2019, and controls are established between government and participant banks;
  • Is consistent with the approach taken in Guernsey and Isle of Man;
  • Allows a further extension of the scheme to be assessed against prevailing public health restrictions; and
  • Ensures that COVID-19 business support schemes are not all withdrawn simultaneously.

 

 

Article 28 of the Public Finances (Jersey) Law 2019 provides that:

 

28      Guarantees and indemnities

(1)     The Minister may, in the name of the States, provide guarantees or indemnities.

(2)     The total amount of all guarantees and indemnities under paragraph (1) that may be provided during a financial year must not exceed £3 million.

(3)     The total outstanding amount of all guarantees and indemnities under paragraph (1) at any given time must not exceed £20 million.

Resource Implications: The approach does not allocate further funding to the scheme, but relies on the Minister’s ability to issue guarantees under the Public Finances (Jersey) Law 2019.

 

In the absence of the States Assembly approving further guarantees the Scheme relies on the Minister’s powers to approve up to £3m of guarantees under the powers provided in the Public Finances (Jersey) Law 2019. Accordingly, the extension of the scheme in this manner restricts the ability of the Minister to issue guarantees for other purposes.

 

Compliance with this limit is controlled by limiting the Guarantee Portfolio Cap allocated to each bank, as has been done with previous scheme extensions.

 

Government employees have been engaged in monitoring the scheme since its launch at the beginning of April 2020. This will continue regardless of whether the scheme is extended due to the need to monitor existing exposures, so the staffing impact of extension is limited.

 

Action required: Associate Director, Financial Services to ensure this decision is published on www.gov.je and communicated to the banks who are participants in the Business Disruption Loan Guarantee Scheme and confirm the agreement of those banks who wish to continue to participate in the scheme until 31 December 2021.

 

Signature:

 

 

Position: 

Deputy Susie Pinel

Minister for Treasury and Resources

Date Signed:

 

Date of Decision

 

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