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Fintech and alternative lenders stand up for vulnerable SMEs

Frustrated with overwhelmed banks and what seems to be an oblivious government, some of fintech’s leading players are coming together. They’re here to stand up for Britain’s SMEs and self-employed workers – and they’re not backing down. Leading the way and packing one hell of a punch are two of the industries’ heaviest hitters, Nick Ogden and Tim Fouracre.

Nick Ogden, creator of e-commerce and founder of WorldPay, Cashflows, ClearBank and RTGS has created a platform which enables SMEs to access loans, using a network of alternative lenders. He comments,

Challenger banks play a critical role in the UK economy. It’s not that historical banks are unable to cope with loan processes, it’s that they’re overwhelmed in the pandemic. Alternative lenders can help by spreading the distribution. Fintechs can help to onboard businesses quickly and get them the liquidity they need”.

But his words and solutions seem to be falling on deaf ears. Rather than opening new lines of liquidity though alternative lenders, the bounce-back loans are mostly confined to overwhelmed historical banks. So, what’s going on? Why is the UK government not making the most of it’s fintech muscle to get through this crisis?

We’re really just trying to get the message across to government that there’s a sector they’ve created – it’s prize fintech sector – which is just not being used”, said Ogden.

Fighting from the same corner is Countingup’s CEO and founder, Tim Fouracre, who – backed by 450 accounting firms and representing 100,000 small businesses – has written an open letter to Chancellor of the Exchequer, Rishi Sunak. The letter, which focuses on the needs of sole-traders and self-employed workers has two clear demands. Firstly, to support businesses which have been left out of the government schemes. And secondly, to provide clarity on the processes and timings of grants.

Fouracre comments, “Our mission at Countingup is to make it easier to run a small business. Right now, it’s incredibly hard … So we decided to survey our accounting partners and write the open letter to give accountants, and the thousands of small businesses they represent, a voice… If their needs are not met in time a great many will go bust”.

He’s not wrong. It’s predicted that 38%1 of the UK’s 5.9 million2 SMEs won’t make it into June because of a lack of cash. 32%3 have already closed temporarily for this very reason and 12% have been forced to transition online.

But Ogden and Fouracre are not the only ones leading consortiums and defending vulnerable businesses. Across the UK, fintechs are standing up for those who need it most and refusing give up. One example is Tide, who have launched a campaign to reopen small businesses first. Another is Revolut who’s lobbying government to provide real-time direct payments. Innovate Finance has also joined the movement, pressuring Westminster to include non-bank lenders in support schemes.

So why isn’t the UK government listening? Like an oblivious middle manager, they’re standing in the way of letting alternative lenders help manage businesses needs. Fintechs and SMEs alike are feeling frustrated. CEO of the SME Finance Forum, Matthew Gamser commented, “During this crisis, when timeliness is more important than ever, it’s disappointing that few governments are finding effective ways to include fintechs in their COVID19 response efforts.”

Despite mounting pressure, our government is ignoring their incredibly agile and progressive fintech sector. Right now, nobody seems to know why. Whether it’s a kind of Tory banking snobbery or good old-fashioned ignorance, something’s got to give. Let’s hope it’s not the millions of vulnerable businesses left waiting in the dark for support.

1 https://www.accountancyage.com/2020/05/07/38-of-smes-wont-survive-into-june-poll-says/

2 https://www.merchantsavvy.co.uk/uk-sme-data-stats-charts/

3 https://www.verdict.co.uk/leasing-life/news/uk-sme-growth-outlook-collapses-hitachi-poll-finds/

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