“This is an important part of the framework of support measures for business that are being put in place. I encourage businesses to look closely at this scheme and to talk to the banks that are providing it.”

The States will underwrite guarantees to the participating banks of up to 80% of lending, with a cut off of £40million.

The support will be focused on Bailiwick businesses and no underwriting will be providing for lending currency in place.

"The Guernsey International Business Association welcomes the States of Guernsey's loan guarantee scheme, alongside the other measures recently announced to support businesses during this challenging time," said Chairman of GIBA, Tony Mancini.

Pictured: Tony Mancini.

“The scheme provides a mechanism to bring government and banks together to support business, and we are pleased to see the States responding to support the economy with a variety of measures to suit different industries and sectors.

“The recent days and weeks have shown the States of Guernsey’s strong leadership on public health and it is positive to see this extended to the wellbeing of our economy.

“Maintaining the economic health of our island is critical to the short and long-term wellbeing of our whole community, and we will continue to work closely with the States of Guernsey during this time.”

A number of principals have been set out ahead of the scheme's launch this week:

• The scheme only applies to trading businesses. Those regulated by the Guernsey Financial Services Commission and property investment and development businesses are excluded. This is subject to a maximum turnover of £10m
• The scheme will only provide support for new lending and not any existing debt, including the cancellation of one form of lending and its replacement with another
• The States' guarantee will apply in respect of 80% of the total amount provided by the bank
• The loans and overdrafts will be for between £5,000 and £500,000
• The States' guarantee will remain valid for a total of eight years - made up of a term of six years, with an additional 18 months to allow the banks to effect recovery and a further six months for the bank to effect a claim against the States' guarantee if necessary
• An individual's principle primary residence can't be given as security to a bank in respect of the scheme
• The banks may lend up to £250,000 without seeking any form of security from the borrower
• The banks have a reporting requirement to government in respect of the number of loans issued and the amount, and in respect of applications received but declined

 Pictured: A number of banks are getting involved in the scheme.

"There is no doubt that the covid-19 pandemic represents an unprecedented challenge for the Bailiwick of Guernsey," said Chair of the Institute of Directors Guernsey branch, John Clacy. "We believe that leaders from government, business and the community must work together to support our economic health.

“Collaboration has always been a strength of our island; it is clear that the whole island is working together and the loan guarantee scheme, along with the payroll co-sharing scheme and other measures will be welcomed by our members and the wider business community.

“We’d urge business leaders to explore all the support options presented by the States of Guernsey.”

The scheme will remain open until 31 December 2020 and businesses are being advised to contact their banks in the first instance, to find out more.

Further support and advice for businesses is available here.