Big business is being urged to help smaller firms - often reliant on bank lending for credit - by financing the suppply chain.

A government green paper (consultation document), Financing a Private Sector Recovery, looked at several alternative means of obtaining finance to ensure businesses are able to grow and boost the recovery.

It aimed to start a dialogue with businesses and the financial services industry to develop and support alternative means of finance for small businesses.

The consultation period for the green paper closed on Monday 20 September and the Department for Business and the Treasury received more than 160 responses. This week Business Minister Mark Prisk met with major business leaders and finance experts in the first stage of working with industry on ideas generated by the paper and the consultation process.

Supply chain finance has several forms but in most cases it involves a buyer organising finance based on its credit rating and on invoices approved for payment to suppliers; ensuring that businesses further down the supply chain are able to cover their working capital while waiting for payments.

"Small businesses will be critical to the economic recovery and helping them access a range of finance options is essential for those firms looking to expand and grow,” said the minister.

"We want to work with business to find the best solutions for increasing finance to small firms, who have previously relied on banks for their finance. Supply chain finance is clearly an option that all large corporates should consider providing. It is one option that could help plug the funding gap of their suppliers while looking to cover working capital as they await payments."