The economic fallout from coronavirus is intensifying the ongoing problem of late payments into a crisis which is threatening the survival of thousands of British small businesses, says Paul Christensen, CEO of UK fintech Previse. To provide emergency support to these companies, Previse is proud to be approved for accreditation by the British Business Bank under the Coronavirus Business Interruption Loan Scheme (CBILS). CBILS loans will be available through our InstantFlow Cash Account solution, enabling SMEs instant access to the money they’re owed by their customers.
The Coronavirus Business Interruption Loan Scheme, delivered through British Business Bank accredited lenders, is designed to support the continued provision of finance to UK smaller businesses (SMEs) during the Covid-19 outbreak. The scheme enables lenders to provide facilities of up to £5m to smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cash flow.
The Federation of Small Businesses (FSB) has consistently highlighted slow payments as one of the biggest ‘killers’ of UK SMEs and has campaigned tirelessly to promote prompt payment by large firms. Slow payments choke SMEs’ cash flow and prevent them from investing in growing their companies and hiring more people. By forcing many SMEs to borrow money just to support cash flow, they raise the cost of doing business for everyone, including their buyers.
The economic disruption from coronavirus has created a perfect storm of misery which risks pushing many SMEs over the edge into bankruptcy. Struggling themselves, many large firms are holding onto payments for as long as possible. Since the lockdown was announced, many large corporates have extended their payment times for smaller suppliers by up to 20%, worsening the already dire situation many SMEs face. At the same time, lenders are reluctant to provide financing, drying up the sources of cash SMEs usually rely on for working capital.
We are already seeing the consequences of this. By the end of April, a quarter of SMEs had been forced to suspend or close trading.
Martin McTague, Policy and Advocacy Chairman of the FSB summed up the situation:
the current climate has exacerbated the late payment challenge faced by small businesses on a daily basis. Many are fearing for their futures simply because their clients refuse to pay on time.”
Previse is proud to be able to play a key role in supporting SMEs using our artificial intelligence technology. The InstantFlow Cash Account will provide SME suppliers with instant access to cash based on the flow of invoices, POs and payments that come from trading with large corporates. This is financed using CBILS loans to provide a flexible solution without costs for the first twelve months (as a result of a Business Interruption Payments).
Our top priority has been to develop a practical solution for small British businesses which will provide the immediate support they need, without building up unsustainable debts for the future. That is why we are seeking to engage closely with organisations like the FSB as we move forward with delivery.
Martin McTague says that “it’s so vital that we have a broad range of providers accredited to the business interruption loan scheme. Over the long-term, we need to see big corporations working collaboratively with finance platforms and small businesses to bring our endemic poor payment culture to a conclusive end.”
There is still a long road ahead to recover from the health, social and business effects of coronavirus. Previse is proud, like many other UK businesses, to be able to play our part in this national effort. To launch this support for SME suppliers, we are working with a number of large UK corporates and organisations like Mayer Brown, who are assisting pro bono. I call on all FTSE 250 companies to join this movement – so that your suppliers are supported with access to cash and we can get the UK economy back to full strength as soon as possible. Contact us today to find out more.
The Coronavirus Business Interruption Loan Scheme (CBILS) is managed by the British Business Bank on behalf of, and with the financial backing of the Secretary of State for Business, Energy and Industrial Strategy (BEIS). British Business Bank plc is wholly owned by HM Government and is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). Full details on CBILS and the list of participating CBILS lenders can be found on the British Business Bank website at: www.british-business-bank.co.uk/CBILS.