Small businesses still suffering from credit squeeze
A Bank of England report has today confirmed that small business funding is still well below government targets despite serious pressure placed upon small business lenders over the last few months. The report from the Bank of England confirms there has been little change in lending to small businesses between the first quarter of 2010 and the final quarter of 2009. So what are the consequences of limited liquidity for UK small businesses?
The very fact that liquidity in the small business arena is being squeezed is a major concern for the short to medium term as many of the smaller businesses today will be the larger businesses of tomorrow. Ironically, over these two quarters in question there has been an increase in liquidity for larger UK operations although this may be simply because they are perceived to be "less risky". However, many perfectly viable and profitable small businesses are being put at risk by the financial sector and unfortunately there is little to suggest a change in the immediate future.
Small business lenders are actually reporting an increase in demand for credit in the small business arena with many now looking to refinance their debts at lower interest rates. We now need to see a credible plan of attack to increase funding liquidity for small businesses otherwise we could see a significant spike in administrations and receiverships.
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