MarketFinance, one of the world’s largest peer-to-peer (P2P) invoice finance platforms, has cautioned that many UK-based SMEs could soon run out of cash. This, as the government-backed funding schemes are scheduled to end soon.
The Coronavirus Business Interruption Loan Scheme (CBILS) will end on September 30, 2020. However, MarketFinance claims that it has found that many small businesses have decided to access funding through the Bounce Back Loan Scheme (BBLS) instead.
But MarketFinance’s research shows or indicates that SMEs have a little over £9,000 (on average) remaining in their bounce back loans. Most small companies expect these funds to run out by the end of this month, MarketFinance claims.
The firm’s research reveals that 77% of SMEs realize that the CBILS can offer a bigger loan facility. About 68% of small companies are aware that they’re refinancing their bounce back loan via the CBILS facility. But 63% of small businesses did not actually realize that applications for CBILS loans are expiring by the end of this month.
Anil Stocker, CEO at MarketFinance, noted that the BBLS may have been a decent short-term solution for small businesses. He believes that it offered the support needed during the lockdowns, however, the CBILS funds should “provide the impetus to do more.” He also mentioned that not having the funds to maintain a business’ cashflow might be “disastrous” for many small businesses.
He added that it’s important for companies to begin looking past the basic survival mode and start looking seriously at how they can change their business model to work productively during the COVID-19 crisis. He believes that there could be new ways for businesses to generate significant revenue, even during these challenging times.
“Securing government-backed funding now, before the deadline, is an opportunity for businesses to access the working capital they need to build for the longer term. The idea of these being ‘unprecedented times’ has been thrown around a lot this year. Initiatives like the CBILS offer similarly unprecedented access to fee and interest-free funding – but only for a limited time.”
MarketFinance has reportedly surveyed 2,000 UK-based company owners and found that 76% are interested in being able to access a CBILS facility if they really need it by the end of 2020.
About 77% of SMEs in the UK claim that they’ll only be able to generate 50% of the revenue this year that they earned in 2019. About two-thirds of business owners stated that a no-deal Brexit could pose major risks to their operations.
Over 1.2 million SMEs have reportedly used the BBLS facility. Meanwhile, around 60,000 UK businesses were approved or qualified for a CBILS loan.