CBILs loans worth just 2% of £212bn owed to coronavirus-hit businesses

The funds sent to UK businesses through the Coronavirus Business Interruption Loan Scheme (CBILS) are worth less than two per cent of the £212.8 billion in cash currently due to UK SMEs in unpaid invoices, according to fintech business bePayd.

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. 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.

According to bePayd, a ‘silent majority’ of UK SMEs are not accessing government support, with unpaid invoices the fastest and most effective way to unlock cash and kick-start the economy. As many as three million businesses are facing bankruptcy in a month’s time.

Anthony Persse, Financial Solutions Director, 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.”

bePayd, owned by global spend management company Proactis, circumvents lengthy invoice payment terms to help big businesses pay their small suppliers quickly without any impact on their own cashflow.

Proactis has pledged that it will not take profit from bePayd for as long as it is necessary to help mitigate the coronavirus crisis. In addition, it has been working around the clock to ensure buyers can simply, quickly and remotely deploy it with their existing finance processes.

Martin McTague, Policy and Advocacy Chairman, FSB 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 signalling his support for a variety of fintech solutions to help SMEs. It is hoped that bePayd can join the list of government-backed solutions to ensure UK SMEs can secure cash swiftly.

bePayd is well-placed to take up some of the strain felt by banks as they work through the details of the Coronavirus Business Interruption Loan Scheme (CBILS) as well as offer support to the businesses that do not qualify.

Anthony Persse added: “We want to contribute to the national effort to save jobs, businesses and livelihoods. We have been working extremely hard to make this system business-ready, and we have also pledged to make it zero-profit through bePayd while we get through the coronavirus pandemic. This means thousands of companies could get paid in just three clicks, right now – but only if big businesses make it available.”

bePayd gives small businesses the option of receiving immediate payment on their invoices weeks and sometimes months earlier than their customers’ standard payment terms allow. Proactis pays the invoice of any supplier seeking early payment in return for a small discount and is refunded by the customer under their standard payment terms. Once registered, suppliers can be paid in three clicks and just seconds over their mobile phone.

However, for suppliers to benefit from bePayd, their customers must first sign up to the service. At a time when many big businesses are having to extend their payment terms, bePayd can be used to help mitigate the inevitable impact on their supplier’s cashflow.