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Credit crunch may stop 'riskier' business ventures

Jan 07 2008

'Riskier' but 'potentially more profitable' business ventures may not be able to go ahead in 2008, due to financial conditions brought on by the credit crunch, claim business experts.

Business Link says that while there is a little evidence to suggest existing lines of credit have been cut from SMEs, those businesses with 'slightly marginal propositions' may face some financial difficulty.

Andy Berrow, senior business advisor for Business Link, says: 'The increase in interest rates earlier in the year, combined with a tightening of borrowing criteria, has had an effect on the ability of SMEs to borrow new money.'

While business performance has not yet been affected by this tightening, there may be some cash crises brought on by 'the traditional slowdown of cash receipts caused by the holidays at the end of the year'.

In November 2007, a report for CBI found that 12 per cent of those SMEs questioned had lost funds as a result of the global credit crunch.

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