Funding Xchange, the leading government approved portal helping small businesses access loans which have been unavailable through their mainstream bank, is applauding the anticipated announcement from the Chancellor that is expected to allow repayment flexibility to the millions of SMEs that have taken advantage of the Coronavirus Loan Schemes guaranteed by the government.
In the latest Quarterly Monitor covering the April to June period, released by Funding Xchange, Funding Xchange’s analysis indicated that more than 6 out of 10 borrowers have insufficient free cashflow to be able to repay the loans, and without some form of repayment flexibility being introduced, that many of these businesses will be forced into liquidation.
CEO of Funding Xchange, Katrin Herrling, said, “Funding Xchange has providing real-time market data to the government to highlight the need to address the inevitable repayment cliff face for many tens of thousands of businesses. The anticipated proposals from the Chancellor positioning the loans in the same way that student loans are managed look very sensible and will provide a great deal of relief. What we need to do now is work on the model that will help banks assess when individual businesses are in a position to make repayments.”
Funding Xchange is in discussion with several banks and is currently applying for funding through the RBS Pool E Remedies Fund being administered by BCR, to deliver the online solution to help banks in assessing affordability of repayments, drawing data available as a result of the new open banking legislation.
“There is real urgency to resolving this issue,” according to Katrin Herrling. “The data we have collected from those businesses that took advantage of the Coronavirus Loans, but have subsequently applied through the Funding Xchange portal for further loans, indicates that, for many the government loans have provided enough relief for no more than three months. For this reason, it is critical that the Chancellor’s anticipated resolution is implemented right now. Without this, it is difficult to see new commercial lenders providing ongoing debt support for the businesses that have not yet started to return their trading to pre-Covid levels. It’s very much a case of ‘do it now or see many businesses die’”