The UK’s economy is heavily dependent on small-medium enterprises (SMEs). According to the Federation of Small Businesses, at the start of 2019, there were 5.9 million SMEs in Britain, which by generating £2.2 trillion accounted for half of all turnover in the UK.

But now many of these businesses find themselves teetering on the edge of collapse as the lockdown stops them trading.

They are facing a cash flow crisis as a result. According to a British Chambers of Commerce survey, nearly two-thirds of British firms only have three month’s cash in reserve or less, while 6% are already broke.

Given all this, it is abundantly clear that being able to help these firms access liquidity is one of the most pressing hurdles our economy is facing.

The government rightly launched an emergency coronavirus business interruption loan scheme (CBILS) to try to facilitate a cash injection.

However, these loans have failed. There are numerous reasons for this, but one of the major factors is that the current 80 percent guarantee is just simply not enough to enable banks to lend at the scale and pace that they need to.

I and many others have called for these loans to be fully underwritten by the government to kickstart lending. So far, that has fallen on deaf ears and we are simply running out of time for these loans to be adjusted quickly enough to save many of our SMEs.

The latest figures suggest just 6,000 firms have been able to access these loans. That’s less than 1 percent of UK SMEs.

Fundamentally, the other 99 percent of SMEs in this country are still desperately needing a cash injection.

But the government has yet to announce any fresh plans to ensure enough liquidity is granted to these companies.

Indeed, you’d be forgiven for thinking that the Chancellor has given up on making the CBILs work when a £1.25 billion bail-out fund for start-ups and tech firms is suddenly launched.

While these businesses undoubtedly play a critical role in our economy, so do the countless other SMEs up and down the country.

Bailing out start-ups is a good place to begin, but frankly, if this policy is pursued without addition, this government will be propping up a house without foundation.

If the government and the Chancellor have given up on CBILS, then the only course of action they should now take is to launch a new bail-out fund that is for all SMEs that were previously viable.

Otherwise, this Conservative government risks destroying our economy by not moving fast enough to save millions of businesses that are the very fabric of it.

By Martin Bellamy

CEO, Salamanca Group