Coronavirus Job Retention Scheme: Huge take up will put financial pressure on struggling SMEs as they pay furloughed salaries up front.

Double pressure: HMRC will hold up £20b in reclaims by businesses for days.

Solution: MarketFinance will ease financial strain on SMEs by now advancing against CJRS claims.

Furloughing: It is estimated that 8 million salaries will be paid to furloughed employees every month between now and the end of June.

22nd April 2020, London: Already cash strapped
SMEs across the country will be (up to) £20b out of pocket when the first round
of salaries are paid to the 8 million people currently furloughed through the
Coronavirus Job Retention Scheme (CJRS). Businesses must pay staff and then
reclaim the money from HM Revenue and Customs (HMRC) online starting this week
(20th April). However, firms are not expected to start receiving rebates until
at least the end of April, and maybe even longer.

Fintech business lender MarketFinance has
stepped in to help SMEs bridge the gap between paying furloughed staff and
waiting for their CJRS claim to be paid by HMRC. Having delivered invoice
finance solutions since 2011, MarketFinance has pivoted their tried and tested
model to provide funding against HMRC payroll rebates. Where invoice finance
has up until now seen businesses advanced money owed to them in outstanding
invoices, MarketFinance will now offer the same cash flow solution to SMEs
looking to advance funds owed in CJRS claims. Businesses will initially be able
to apply for funding facilities up to £150,000.

Anil Stocker, CEO at MarketFinance, commented: “With
April’s payday looming, it is essential that the HMRC application process is
smooth and that payments are made as soon as possible. Any delay would
exacerbate the cash crisis many companies are facing and could threaten jobs
and the survival of these businesses.”

“We’ve been advancing cash to businesses since
2011 against invoices with long payment terms. We have perfected this model
over the years and, now, have quickly adapted our model to meet the current
needs of business. These vulnerable businesses, already very short on cash in
the bank, will face yet another pressure by having to pay salaries for
furloughed employees and then reclaim it days later.”

Emma Loisel, chair and co-founder of
coffee wholesalers Volcano Coffee Works commented: “The furlough scheme is most
helpful, but timing and speed of payments is key. Even though 90% of our
customers have closed, most of our business operating costs continue. We are
monitoring our cash flow on a daily basis. Employees are a big part of our
costs. We furloughed two thirds of our team in March, so we have already paid
upfront for furloughed staff last month. Now we will pay another month before being
reimbursed by the Government. This is
causing a huge dent in our cash flow and makes it hard to focus on everything
else we need to do to ensure the business gets through this.”

Rashesh Joshi, Co founder & Managing Director at Alexander Rosse Chartered Accountants commented: “If you think of the maths at the most basic level, business owners have received less that £2b from the CBILS scheme and yet they are likely to be out of pocket by £20b for days by HMRC which is inevitably leading to massive cash challenges. Something is not quite right here. Moreover, it is unknown if HMRC will be able to provide these funds on time, stressing the cash position of businesses and challenging one of the key objectives of this policy: the protection of business activity and employment.