The Chief Executive of 1pm plc (AIM: OPM), Ian Smith has today called on the Government to urgently review its approach to its COVID-19 funding initiatives to ensure around 500,000 of the UK’s smallest SMEs can more easily access the money.
1pm, the AIM-listed independent specialist provider of finance facilities to UK SMEs, has been working on a case by case basis to support a number of its 20,000 clients during the crisis.
This help includes providing payment holidays, the rescheduling of lease and loan agreements as well as further advances within existing facilities to invoice finance clients. However, 1pm cannot distribute the Government COVID funding to its customers.
Along with other non-bank alternative finance providers, which together account for around one-third of SME lending, 1pm isn’t currently an accredited British Business Bank partner.
According to Ian Smith, the approval process could take weeks, with many of its clients desperate for the funds now, with the smallest SMEs often high street companies like coffee shops, hairdressers, and restaurants, in the direst need.
Since the last financial crisis, many SMEs have moved away from the traditional banks, to alternative finance providers like 1pm to get the financial support their businesses need.
This shift happened as banks reduced their exposure to the sector, including reducing credit facilities to many of the smallest companies. According to 1pm, it is these SMEs (estimated to be around half a million), that are finding it hardest to get access to the Government money.
These businesses have limited relationships with the high street banks, which can distribute the financing, and which are reported to be overwhelmed by calls.
Ian Smith, CEO, 1pm plc, comments: “While the size of the Government’s financial support for SMEs is significant and welcomed, there urgently needs to be a review of how it is being distributed. The Government just hasn’t appreciated the change in the lending landscape since the last financial crisis.
“The smallest companies, particularly those on the high street like coffee shops and hairdressers, need money urgently. They are struggling to get access to Government funding, because they have moved to use alternative finance providers like ourselves, rather than the high street banks.
“1pm and other lenders like us have collectively had thousands of phone calls from worried clients. While we are doing all we can to support these businesses, it is deeply frustrating that we can’t help them to get quick access to the Government funding. We are applying to become an accredited British Business Bank partner, but the process will be slower than the urgent need demands.
“Together with other companies in the sector, we are actively lobbying to request changes and extensions to the Government’s funding initiatives to include the non-bank lending sector. If successful 1pm can better help the UK SME sector throughout this period of economic uncertainty.”