Friday 8 June 2012
Growing a business is being made more difficult by a continued shortage of finance from the banks, it has been suggested.
Phil McCabe, spokesman for the Forum of Private Business (FPB), said that while many companies do not turn over a profit in the first couple of years, they do need to have cash in their accounts.
"Not being able to borrow commercial finance at affordable levels just basically [reduces] your ability to maintain any kind of financial cash flow, particularly when that's taken into account with late payment of invoices," he stated.
Mr McCabe noted that there is around £24 billion in late payments to small firms in the UK at any one time.
"The consequences of more affordable commercial finance not being provided by high street banks or alternatives which struggle to get a toe into the market dominated by these high street banks is that businesses will close," the FPB expert stated.
A lack of credit prevents small businesses from taking advantage of the new opportunities that emerge during the recovery from recession, he noted.
Without cash, they are unable to take on new staff or bid for contracts and win that new work, Mr McCabe stated.
"It is all about allowing businesses to grow and that means creating jobs, but without more affordable bank finance they won't be able to do that and many could close," he added.
Posted by Steve Williams