DAVID Cameron is urging Britain’s biggest companies to use their strong credit ratings to help the smaller firms which supply them gain access to cheap bank lending.
Under the supply chain finance plan, when a large company approves an invoice from one of its suppliers for payment, it notifies the bank which can then offer the supplier an immediate 100% advance at a lower rate of interest knowing the bill will be paid.
Downing Street estimates that the scheme could unlock up to £20 billion of new finance for supplier companies - many of them small and medium enterprises.
The Government intends to offer the same facility to its own suppliers, starting with community pharmacies in England which could gain access to up to £800 million in additional credit.
“This Government is determined to back all those businesses who aspire to get ahead and take on more people,” the Prime Minister said.
“In the current climate, viable businesses can struggle to get the finance they need to grow - this scheme will not only help them secure finance and support cash flow, but will help secure supply chains for some of our biggest companies and protect thousands of jobs.
“It can be a win-win, with large companies and small suppliers both benefiting from this innovative scheme.”