The Soaring Costs Of Doing Business

Costs are rising fast for small businesses already struggling with cash flow problems and late payment issues. In fact the cost of doing business is rising much faster than the prices paid by consumers, squeezing profit margins and suggesting new investment is likely to be sluggish for some time to come. Bank lending to businesses has already hit its lowest level since 2006, despite government efforts to stimulate lending, a report suggests. Whilst banks are continually arguing that demand for loans remains low, businesses on the other hand argue that banks are just are unwilling to lend.

Commenting, Gerald Irwin of Sutton Coldfield-based Licensed Insolvency Practitioners and Business Advisers, Irwin Insolvency said, “We are all aware that banks are not keen on lending but more interested in their own bottom lines but many small businesses are currently revealing the threat of having their existing credit facilities withdrawn. If business overdrafts are either withdrawn or indeed reduced, this in turn could lead small businesses to suffer a whole host of cash flow issues further down the line.”

All the government schemes introduced so far, which have been designed to increase lending, may well have helped a few but unfortunately most continue to get squeezed unmercifully. In the interim the first phase of the introduction of the new business bank has been completed to address the long-standing gaps in the small business sector finance market. The bank is expected to be fully established with £1 billion of new capital in spring next year. Will it actually save the day? The jury is still out on that one.