We all knew Silverstone was taking a risk when it signed a deal with Bernie Ecclestone to host the British Grand Prix until 2026. The annual fee charged to host the race was estimated at £12.5m, more than the circuit has ever paid, and it rises by 5% every year.

After Donington's plans had failed miserably Silverstone had little choice but to accept the deal in order to keep the British GP on the Formula One calendar. Analysis showed the cheapest ticket prices will rise by as much as 50% to cover the cost of the fee but a report in the Express, by Pitpass' business editor Chris Sylt, reveals Silverstone may have another source of funding to draw on.

According to the report, Lloyds TSB, the UK high street bank which is 41% owned by the taxpayer, has given a £26m loan to Silverstone. It gives Silverstone the keys to keep the circuit up to scratch throughout its F1 contract - one of Ecclestone's conditions for giving it the race contract.

The recently-unveiled redesign, featuring the loss of the Bridge corner and a sweeping right-hander after Abbey, is believed to have cost £7m. Next on the agenda is construction of a new pit and paddock area. They will be built between Club and Abbey in time for next summer and are set to cost over £20m so there will be little left from the Lloyds loan.

Silverstone isn't stopping there though as it is also negotiating with Northamptonshire county council to secure a further £10m loan. If Silverstone gets this then perhaps it may not need to raise ticket prices to cover the increased fee. However, in the current economic climate it doesn't seem likely that any UK council will want to be seen bankrolling F1. In contrast, the Lloyds loan is already in the bag, but, as with everything, it comes at a price.

The deal was led on behalf of Lloyds TSB by Steve Lyon from the bank's Milton Keynes corporate office and one of the key terms he included was that the loan is secured on Silverstone's 760 acres of land and buildings. In a nutshell, if Silverstone fails to repay the loan, its current owner, the British Racing Drivers' Club, could lose its crown jewel. Silverstone's land and buildings alone were valued at £12.9m at the end of 2008 so the bank has a good deal of security. In contrast, it is hard for Silverstone to turn a profit from F1.

Ecclestone's business takes all the revenues from trackside advertising and corporate hospitality at the race leaving Silverstone with tight margins. True, it made a modest after-tax profit of £2.1m in 2008 but the previous year its bottom line crashed to a £147,000 loss.

"With the Grand Prix secured at the circuit until 2026, we needed a strong financial partner that would work with us in the long-term," says Ed Brookes, financial director of Silverstone Holdings, adding "the team from Lloyds TSB has demonstrated that they will do exactly that."

Unsurprisingly, with the security of the circuit and interest accruing from the loan, Lloyds is beaming about the deal. Kevin Stannard, area director for Lloyds TSB corporate markets in east Anglia and the south Midlands says "this is the sort of deal which transcends the business world. Not only is Silverstone one of the most famous and popular racing circuits in the world, it also has a huge influence on the success of the local economy."

Stannard adds that Lloyds was "impressed by the Silverstone team's strategy and plans for the future of the circuit as a world class venue and are keen to do all we can to help Ed and the Silverstone team realise their vision."

We got the first taste of this vision last week when the new track layout was unveiled by the Duke of York. In just two months we will see whether the investment was worth it.