Last week (weekending 29th February) the global stock markets saw their biggest fall since the financial crisis of 2008. The markets were beginning to reflect on the spread of Coronavirus and the impact it may have on business.

Some think that the market’s reaction was a bit overdone. Others think that it is correct and there is much worse to come. Only time will tell which view will prevail.

However, there is no question that financial markets are uncertain, and that Coronavirus is spreading faster outside of China compared to inside China.

China’s forthcoming GDP figures will not be good as much of its productive capacity closed down during January.

Outside of China, as countries to try to get to grips with the spread of Coronavirus there is talk of putting cities into quarantine lockdown and prohibiting large gatherings of the population. This is very similar to what China did to control the spread of Coronavirus. The prevailing view from world governments is that similar actions have worked elsewhere.

These actions may be justified in terms of world health and safety, but they will also place 1,000s of business in a very difficult financial position. If cities are placed in lockdown it may take anywhere between three to six months before manufacturing and trading returns to what we might call normal.

In this period, it is likely that many good businesses will start to run out cash. However, we need theses business to come out of the other side of the cash squeeze, if economies are to get up to full production. There has been some mention of action by Central Banks.

This is likely to be in the form of cuts in interest rates or perhaps some form of Quantitative Easing. These actions may be welcome but are unlikely to have any impact on small business in the short term. What these businesses will require is either cash or extended credit facilities.

It is unlikely that new funders will step forward and provide credit facilities. Business will look to its current debt provided. But in uncertain times, the credit appetite for provided additional facilities will be restricted. After all, the banks too have a responsibility to look after the interests of their shareholders.

So how do we square the circle? How do we feed cash or extended credit facilities into the 100s of SME businesses that are the backbone of many national economies? Central banks have indicated that they are prepared to step in and support the markets.

Perhaps a part of their action could be to underwrite the provision of extended credit to essential SME business? This may appear as a big ask.

However, in the early years after the financial crisis the Bank of England invested £375bn, some 20% of GDP, in Quantitative Easing. A similar strong signal to support SME with a more practical form of support may be required soon.