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Support for small firms

Fintech firms devise cash flow solutions for SMEs

Philip King: encouraging fintech solutions

Scottish fintech companies are helping to keep cash flowing to small firms struggling with access to bank loans and government support.

There are estimates that as many as three million businesses are facing collapse in a month’s time.

According to bePayd, part of Aberdeen-based invoice factor Proactis, a ‘silent majority’ of UK SMEs are not accessing government schemes.

It says speeding up the payment of invoices is the fastest and most effective way to unlock cash and kick-start the economy.

bePayd hopes to take up some of the strain felt by banks as they work through the details of the Coronavirus Business Interruption Loan Scheme (CBILS).

The country’s smallest businesses (under 50 employees) generate £1.53 trillion in annual revenue for the UK economy yet wait on average 50.8 days to be paid.

Now more than ever, small businesses deserve to be paid faster

– Martin McTague, FSB

According to bePayd analysis, this means that, at any one-time, small companies are waiting for up to £212.8 billion in cash for work they have already done.

But the money so far paid out through the CBIL scheme represents just 2% of this total.

Anthony Persse, financial solutions director at 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.”

Martin McTague, policy and advocacy chairman at 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.”

UK Interim Small Business Commissioner, Philip King, is keen to encourage a variety of fintech solutions to help SMEs through the current difficulties.

Fortunis Capital is supporting another Scottish fintech company’s plan to help eradicate crippling payday loans.

The venture capital firm has invested in an app developed by Karma which has been trialled in Scotland.

Karma is offering competitive rates on small salary advances and Fortunis believes it will make inroads into the £340 billion unsecured individual debt problem.

Innovations Minister Ivan McKee describing Karma as a fintech company “seeking to solve a major societal challenge”. 

Legal threat over grant

A consortium of Scottish businesses is threatening to take the Scottish government to court over its coronavirus grant scheme.

The group, made up of firms in retail, hospitality and leisure, intends to lodge a petition for a judicial review.

The companies campaigned for the Scottish Government to fulfil its pledge to match the grant scheme for businesses offered by Westminster.

They say the revised scheme still only offers grants worth 75% for each property compared to a 100% grant offered to companies south of the border.

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