Banks are increasingly looking to call in outstanding debts from small businesses whilst new loans are becoming harder and far more expensive to secure. There is little doubt that credit conditions have contracted in recent times with little sign of improvement.
Commenting, Gerald Irwin of Sutton Coldfield based Licensed Insolvency Practitioners & Business Advisers, Irwin Insolvency said, “Businesses are being actively encouraged to pay off their outstanding loans. At the same time, complaints are soaring about fees being charged for undrawn overdraft facilities. Little wonder then that there is a lack of appetite for borrowing with businesses opting to reduce their exposure to debt.”
There are significant signs that banks are gradually turning off the tap on lending for all but the very lowest credit risks which is likely to have a notable effect on the economy. In order to kick-start the economy, businesses need to grow and develop. In order to do so they need funds and those funds are simply not there.
To compound matters even further, there are now real indications that the crisis in the Eurozone is beginning to seriously hit exports with sales to Europe weakening. Equally, the prospect of a strengthening of the pound is causing disquiet among exporters.
“Businesses are now looking at emerging markets in order to compensate for the weak demand in the home market,” added Mr. Irwin.