Morrisons is extending its pledge to make immediate payments to small suppliers for a further three months to help them through the coronavirus crisis.

The grocer said farmers, food producers and other small businesses that supply it with goods will continue to be paid immediately until September.

Morrisons brought in the policy in March and said it would last until the end of May in a bid to “support the cash flow” of small businesses “during a difficult time for the British economy”.

The retailer also reclassified companies with up to £1m of businesses with Morrisons as a smaller supplier – a limit that had been previously set at £100,000 – allowing more firms to benefit from speedier payments.

Around 3,000 small suppliers to Morrisons, including 1,750 farmers, will continue to receive immediate payments over the next three months.

Chief executive David Potts said: “Small food-makers and farmers have helped us to play our full part in feeding the nation. They have told us they face continued financial pressure and we want to be there for them during this challenging period.”

Federation of Small Businesses national chair Mike Cherry added: “Many small suppliers have seen their payment terms lengthened or cashflow held up as their big clients try to insulate themselves from the impacts of Covid-19. It’s refreshing to see a large company like Morrisons championing prompt payment during this national emergency by extending its promise to pay small suppliers immediately.

“This is what good business looks like in these unprecedented times and we need to see more positive action like this as the whole business community looks to get back on its feet.”