SME Funding Options

Businesses abandoning the banks

Mike Symes - Tuesday 07.04.09, 11:12am

http://www.smebusinessnews.co.uk/businesses-abandoning-the-banks/216/

New research just published reveals a massive increase in credit refusal for businesses, driving owners to seek out alternative funding options.

The independent study of 1000 UK accountants has revealed that the number of business clients being refused finance by traditional lenders this year has almost tripled. Such a dramatic rise in the level of credit restrictions is stimulating renewed interest in alternative forms of finance.
 
Previous research in 2008 indicated that less than a fifth of accountant’s clients had been refused credit from traditional sources such as banks. However in just 12 months, the downturn has had a major impact with refusals rocketing to nearly two thirds (58 per cent).
 
Other key findings from the research include:
· Businesses in the North East are suffering the most with a reported 73 per cent of accountants’ clients having been refused credit this year, compared to 48 per cent in the South East
· Amongst the accountants surveyed, the recruitment industry (24 per cent) is seen to be suffering the most from financial difficulty, followed by construction/property (23 per cent). Retail Services are perceived to be the most stable
· Seventy-one per cent of accountants have seen an increase in clients suffering with bad debt, with over two thirds (70 per cent), believing services such as Bad Debt Protection are more important for business today than a year ago.

With banks proving less than supportive, this is a good time to considerindependent financing options such as invoice discounting.