Comment from Nucleus Commercial Finance – changes to Crown Preference

Commenting on the re-introduction of Crown Preference, Ian Bath, Corporate Sales Director, Nucleus Commercial Finance, said: “Although the re-introduction of Crown Preference has been expected for some time, and its implementation has already been delayed once, its impact will be felt significantly by UK SMEs. The new rules will mean less cash for businesses at a time when they desperately need it, to get back on their feet following a second national lockdown.

“Businesses that have delayed payments to HMRC and sought Time to Pay arrangements to preserve cash, are likely to find these amounts being deducted from their inventory and other floating charge borrowings.

“However, it is not just businesses who will feel the squeeze. A number of asset based lenders have already been looking to exit, or scale back, existing inventory facilities, reducing the options for businesses seeking funding. With CBILS soon coming to an end, many businesses will be looking for secured longer-term lending. Asset based lending will play a vital role, enabling businesses to unlock additional value from the assets they already own, providing them with certainty in times of great uncertainty.”