Budget measures to ease a forthcoming cash-flow crisis must get money to front-line businesses as quickly as possible to be effective, leading experts have warned.

More than 80 people gathered yesterday morning for The Herald’s Budget Breakfast Briefing to pick through Chancellor Rishi Sunak’s announcements from Wednesday, which were dominated by measures to combat what is expected to be a substantial economic fall-out from the Covid-19 pandemic.

Susan Love, policy manager with the Federation of Small Businesses (FSB), told the audience that Mr Sunak’s remarkable move to temporarily abolish business rates for smaller firms in England and Wales had set off “lots of frantic phone calls” to Scottish Government rates officials. Scottish Ministers are being urged to match the level of support in England, which will provide 100% rates relief for 12 months to all firms whose premises are valued at up to £51,000.

“I think everyone was surprised by how generous the announcements on business rates were, and we take that to be a signal of how serious Government expect the impact of the virus to be,” she said.

“It will be very important that we get financial support to front-line businesses as soon as possible. Lots of businesses don’t have a good relationship with their bank now – most small businesses won’t have any kind of relationship manager, and they have not been used to having overdrafts.

“We are going to need an urgent change in approach from banks if we are going to get this cash to businesses.”

But as Graeme Roy, of the Fraser of Allander Institute explained, the Scottish Government’s hands may be tied when it comes to providing any additional support.

MSPs have already committed to spending about £500m of the additional £640m that will be coming to Scotland as a result of Wednesday’s UK Budget, Mr Roy said. In addition, all of the extra £1.2 billion pre-announced in the autumn has also been allocated.

“The Scottish Government are getting a lot of money next year, it just so happens that they have spent most of it, or have allocated the spending,” he said.

A spokesman for the Scottish Government said yesterday afternoon there could be a further £360m of cash as a result of UK Covid-19 spending measures. Discussions are taking place “about how the funding should work in these exceptional circumstances”.

The Chancellor’s newly-established Business Interruption support programme will offer loans of up to £1.2m to those affected, though as yet there is no clarity on which firms might be eligible to apply. In addition, Ms Love said there would be a reluctance among many firms to take on debt when faced by the uncertainty of when trading might return to normal.

Grant Johnston, partner and head of wealth planning at Wright Johnston & Mackenzie, agreed that the biggest fear is cash flow. This will affect all firms as an absence of staff slows down normal business processes.

“Before you know where you are, within the next one to three months, you can see credit terms going from 30 to 60 to 90 to 120 days,” he said. “You may know that you’re going to get the money, but in the interim businesses are still going to have to fund staff costs and other costs, and I can see there being a real issue for companies that don’t have cash reserve.”

Mr Johnston added: “Although there is the cut in interest rates and the banks are being encouraged to lend, we have had that before with quantitative easing, and the banks sometimes don’t follow as the Government would wish.”

“After 2008 we had some reduction in VAT rates, so I am wondering if the Chancellor is keeping it up his sleeve because depending on how long it takes it to peak, how long this stalling in our economy is going takes, then that is probably one of the other major stimuluses that he has got to reduce the costs on small businesses,” Mr Campbell said.

Cyrique Bourbon, asset allocation strategist at Brown Shipley, said the suspension of business rates will be a big relief for high street retailers already struggling against the online giants.

“Clearly, there is a fundamental shift in consumption to online, but the high costs associated with physical stores means that for many small businesses, this was not a level playing field,” she said.