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Small enterprises feeling effects of credit crunch

Oct 03 2007

The restrictive lending adopted by financial institutions is beginning to take its toll on SMEs.

According to the Federation of Small Businesses (FSB), lenders are less likely to do business with small firms as they represent a riskier investment than their larger counterparts.

Commenting on the crunch, and what it means to small enterprises, Matthew Knowles at the FSB says: 'At the moment small firms are feeling the knock-on effects of the credit crunch.

'Interest rates on loans are into double digits, partly because of the high rates at the Bank of England but also because small businesses are seen, often incorrectly, as a riskier investment on the behalf of banks.'

He adds: 'Terms and conditions are also getting tighter because of the credit crunch at the banks.'

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