SMEs are being squeezed by tighter lending terms
Jul 19 2010
“Banks remain tight fisted, say SMEs”
Banks are still turning the screws on businesses by demanding higher charges on loans.
Some 58 per cent of enterprises renewing their debt facilities report increased interest rates and administration fees compared to previous lending arrangements, according to a survey from the Institute of Chartered Accountants in England and Wales (ICAEW).
Clive Lewis, head of enterprise at ICAEW, says: ‘The recession emphasised the importance of sound financial management. This financial discipline means there is now less demand by firms to extend their debt, but it is also being influenced by [businesses] having to pay a higher price for debt facilities.’
Of the 1,009 companies surveyed, 17 per cent say their organisation has limited its growth plans because of managing external debt facility.
According to the survey companies are meeting their financial needs through existing debt finance (53 per cent), by reducing working capital (45 per cent) and cutting costs (43 per cent).
For more information you can contact Clive Lewis through the ICAEW’s website.