13 June 2024

More government-funded business loans aren’t a sustainable long-term solution

| The European |

Martin McCann, CEO of Trade Ledger, provides the following comment ahead of tomorrow’s budget and the predicted introduction of a new business loan scheme

“Tomorrow Rishi Sunak delivers the UK Budget 2021. We don’t know what he’ll say. We do know that business loans schemes have to stop eventually. What will happen next?

“The public purse can’t fund the loans indefinitely. They will need to transfer back to the private sector. This will prompt an urgent rethink for business borrowers and lenders about cashflow. The government is aware of the problems. The credit system hasn’t changed much for hundreds, if not thousands, of years, and it’s not up to the task of helping UK businesses to recover and thrive.

“It’s too slow. Business borrowers need 30 hours to apply then have to wait 90 days for cash. It’s focused on tangible assets, but 80% of UK businesses are service-focused and have intangible assets.

“Times of challenge like this are when we should see the most innovation. What’s stopping lenders assessing the creditworthiness of business borrowers in new ways, such as using information from their supply chain? And operating at internet speed?”

Trade Ledger exists to enable lenders to provide credit to small and medium enterprises (SMEs), by showing them at a glance the information they need to make good decisions. Its platform puts the customer experience at the heart of the process and expands credit distribution without increasing risk, unlocking a £1.2 trillion un-served segment of the £7 trillion global SME credit market.

Trade Ledger brings together all the data that lenders need throughout the customer lifecycle, analyses that data, and automates key processes. Lenders can act faster with less risk and serve more businesses at greater profit. They can also move into new services such as embedded finance, including offering loans as part of the payment journey on websites selling to businesses.

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