UK small firms 'have credit rating troubles'
Jun 29 2009
The majority of the UK's small businesses have a credit rating which could damage their chances of obtaining finance, a new study claims.
According to risk management agency Graydon UK, 60 per cent of the small and medium-sized companies analysed by a credit scoring system were ranked as being high or above normal risk.
In addition, only 13 per cent of the three million firms studied were classed by the agency as low risk.
Martin Williams, managing director of Graydon UK, points out that the recession has impacted on the creditworthiness of small companies, but says this has been exacerbated by a lack of relevant information on their financial performance.
He explains that a missing data damages corporate credit scores in the same way it does personal assessments, adding: 'Companies need to appreciate that sharing current financial information holds the key to seizing more control over the credit recommendation they receive.'
Williams also calls on the government to establish a central registry for unincorporated businesses in the UK, claiming this would solve the problem of the lack of details about them causing poor credit scores.
Earlier this month, the Rowlands Growth Capital Review, a government report of small firms' access to finance, asked for evidence from companies on whether intervention is needed to improve the UK's funding and credit situation.
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