Pharmacies will be able to access "low-cost" loans while they wait for NHS payments, Prime Minister David Cameron announced today.

Banks will offer contractors their estimated prescription payments as an alternative to "expensive" commercial loans while pharmacies wait for the NHS Business Services Authority (NHS BSA) to pay out, under a finance scheme unveiled by the Prime Minister.

Under the ‘supply chain finance' scheme, banks will lend the estimated sum owed to pharmacies about a week after prescriptions have been submitted.

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	Under the current system, the NHS BSA takes up to four weeks to make the estimated payments, before the final balance is paid the following month.

The scheme would mean pharmacies had "access to money more quickly instead of having to wait for the first payment at the end of the month", Number 10 said.

Interest rates will still apply, but the government pledged that under the scheme, due to start in the next financial year, these would be at a "much lower cost than any borrowing arrangement they could usually access".

PSNC welcomed the scheme, saying it could be a "real help" to contractors if the terms were "good enough".

"Anything that can help pharmacy contractors to better manage their cash flow in these tough economic times is good news, and as such we welcome this initiative from the government," said PSNC chief executive Sue Sharpe.

The initiative, which is optional for pharmacists, forms part of the government's ‘supply chain finance scheme' to help small and medium-sized businesses across the country access "affordable finance".

More widely, it will involve large companies notifying their supplier's bank when an invoice has been approved for payment so the bank can offer an advance to the supplier.

Mr Cameron will try to persuade some of the UK's largest companies to sign up to the scheme at a meeting at Downing Street today.