S&P called supply-chain finance a “sleeping risk” that can “mask episodes of financial stress.” A prime concern is that the banks or other lenders may yank the financing from struggling companies, cutting off a source of cash at a time when it is desperately needed.
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Supply-chain finance is new risk in crisis
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Lex Greensill, the company’s founder and chief executive, said in an interview that he believes the problem facing the industry is “demand has escalated so much that providers are not going to be able to keep up,” rather than existing financing being withdrawn. His company has seen demand triple in the past few weeks, he said, adding it was “working flat out to get more support to more corporates.”
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