A consortium of fintech companies has formed to offer the government the ability to speed up the allocation of SME loans in response to Covid-19.
It is designed to focus on small businesses that need up to £150,000 loans to stay solvent and manage cash flow, and is calling for £5bn government funding to kick start distribution ahead of critical end of the month difficulties.
The consortium is spearheaded by leading fintech entrepreneur and WorldPay founder, Nick Ogden, along with ClearBank and Funding Options.
It has more than 167 members in total so far, with lenders including Just Cash Flow, Credit4, Invocap, Merchant Money and Fleximize. All UK lenders are being welcomed to join.
Cash flow is critical for business survival, particularly for micro businesses which make up 96% of the UK’s business population. As of Friday, just £1.1bn of £330bn SME loans in the coronavirus business interruption scheme had been granted signalling that a crisis point will hit by payday at the end of the month.
To offer a solution and mitigate further economic damage, the consortium has been set up to open access to lending, make it easier to onboard businesses and facilitate fund delivery, so that SMEs can receive the money they need as soon as possible.
ClearBank can onboard regulated businesses and facilitate fund delivery, and Funding Options can provide access to appropriate lending, with businesses being able to access the scheme via Business.co.uk. In addition to the above the scheme is open for any UK lender to join.
Nick Ogden, leader of the consortium, comments: “Small and micro businesses are at the heart of our economy. Cash flow is critical and in the current system, they’re not receiving funds fast enough. We need a specific distribution channel to serve thousands of small businesses and this can only be achieved through a consensus approach.
“Via this consortium we have built a fully regulated structure that can uniquely support the government who are trying to find a way to fix this problem. We’re ready to go.”