Covid-19 loans providing just 2% of cash needed to cover unpaid bills – research

The £2.8 billion of funds sent to UK businesses through the Government’s Coronavirus Business Interruption Loan Scheme (CBILS) account for just 2% of the £212.8 billion currently due to small and medium firms in unpaid invoices, according to new research.

Fintech invoice platform bePayd, which calculated the figure, said the sheer sums of money constantly flowing through SMEs show just how important it is to ensure the cash that is available gets through to thousands of small businesses.

Chancellor Rishi Sunak has offered funding of up to £330 billion through several loan schemes including the CBILS plan, guaranteeing 80% of loans to businesses suffering from the lockdown and disruption.

He has been under pressure to cover 100% of the loans, to speed up the application process and free up cash, although he has so far resisted.

The silent majority of small businesses are in their millions, are not accessing the CBILS scheme, and are desperate to know payments can be made quickly

Anthony Persse, a director at bePayd’s owner Proactis, said: “While the UK Government recognises the importance of keeping companies afloat during this crisis, we must put into perspective how much more money needs to flow through the economy to avoid the collapse of huge swathes of businesses and livelihoods.

“With an estimated £212 billion currently due to SMEs, the CBILS loan scheme is falling well short of addressing the cashflow problems that lie ahead.

“We must ensure that larger businesses have adequate means to process cash payments quickly, handing it on to their suppliers and contractors.

“The silent majority of small businesses are in their millions, are not accessing the CBILS scheme, and are desperate to know payments can be made quickly.”

Proactis, a global payment management company, calculated the figure based on the Government’s figures for total revenues at firms with under 50 staff – £1.53 trillion – versus the average payment time of nearly 51 days.

The Government has introduced some grants for smaller businesses, but many are reliant on fulfilling orders and contracts for larger companies.

Martin McTague, policy and advocacy chairman of the Federation of Small Businesses, said: “The UK already faced a late payment crisis before coronavirus hit, and we know that late payments are likely to get worse in an economic downtown. Now more than ever, small businesses deserve to be paid faster.”

The UK Small Business Commissioner, Philip King, is understood to be interested in using fintech, including bePayd, to help SMEs process faster payments to SMEs.