Are small businesses being strangled by the banks?

As more and more UK small businesses feel the pinch of the economic downturn there is growing concern about the role of UK banks. Despite promises to the contrary only weeks ago it seems that liquidity in the small business arena is still relatively low and causing major problems. So why is liquidity so scarce in the UK banking arena?

There is no doubt that UK banks are, and continue to be, concerned about the outlook for the UK economy in the short to medium term. As a consequence, we have seen liquidity in the small business arena fall to dangerous levels putting would be secure businesses at risk for the sake of what can in many cases be relatively small lines of credit. This comes just months after UK taxpayers injected billions upon billions of pounds into the money markets and billions upon billions of pounds into ailing UK banks. So what next?

As the UK economy readies itself for yet another turbulent period in its history we are unlikely to see a significant increase in liquidity in the small business loan arena therefore causing more problems for businesses which should have a prosperous future with a little assistance from their bank managers.