"Johnathan Dudley, Head of Manufacturing and SME Corporates at Crowe, said speed was critical if small suppliers were to survive: "It is absolutely vital that the money starts to filter down the chain - and quickly. The depth of penetration of the loan funding is an issue. Will it trickle down the supply chain and across ancillary businesses fast enough, wide enough and far enough before companies run out of cash?""
"Some business leaders said that, after COVID-19, directors are now far more reluctant to provide personal guarantees to secure loans or overdraft extensions, adding another layer of risk for smaller firms. Dudley emphasised the need for additional measures: "There is an immediate need for stress emergency funding and support in addition to funding feeding down from JLR. More needs to be done to help businesses that are running out of time, or who are not in the direct supply chain.""
"He warned that Tier 1 suppliers and JLR itself are unlikely to place fresh orders until they have exhausted existing stocks built up during plant shutdowns - delaying the point at which smaller firms further down the chain receive payments. In the meantime, SME suppliers face mounting bills. Rent, mortgages, wages and payments to their own suppliers cannot wait for funding flows to improve."
Cash from a £1.5 million government-backed commercial loan intended to support Jaguar Land Rover's supply chain is not filtering quickly to smaller suppliers, raising fears many SMEs could collapse. Webinar participants warned that Tier 1 suppliers and JLR will delay fresh orders until existing stocks run down, postponing payments to downstream firms. SME suppliers face immediate bills for rent, mortgages, wages and supplier payments that cannot wait. Directors are increasingly reluctant to provide personal guarantees for loans. There is a call for emergency stress funding and wider measures beyond JLR-fed financing.
Read at Business Matters
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