The Treasury has scrapped plans to introduce a supply chain finance scheme after feedback found that a requirement for larger companies to sign the Prompt Payment Code (PPC) might act as a deterrent, according to Sky News.
The new finance scheme would have handed billions of pounds to providers of supply chain finance, to help SMEs bridge a cash gap during the COVID-19 pandemic. However, leaked responses to a call for evidence showed respondents were deterred because of the PPC requirement.
The proposal, under consideration since May, amended the COVID Corporate Financing Facility (CCFF) to include faster payments of SME invoices. Currently, only companies with turnover greater than £45m can avail of the CCFF.
Construction News understands the feedback received by the Treasury concluded that the scheme would not be likely to bring sufficient benefits to UK SMEs. The feedback suggested government should instead prioritise other schemes currently available, such as the Coronavirus Business Interruption Loan Scheme (CBILS).
In April, an SME firm told CN it was being blocked from applying for the CBILS scheme, while the Federation of Master Builders found 10 per cent of its members who applied to the scheme were rejected.
CN understands that no further coronavirus financial aid schemes will be announced.
A HM Treasury spokeswoman said: “We have discussed a number of proposals with industry in developing support schemes, and are confident that we give businesses the help they need. Our support schemes have helped provide a lifeline to businesses of all sizes across the UK, protecting millions of jobs and ensuring they survive the outbreak.”
Source: https://www.constructionnews.co.uk/financial/treasury-scraps-sme-fund-due-to-prompt-payment-code-deterrent-02-07-2020/