SMEs Continue to Look to Banks for Finance

Article excerpt

Byline: Karen Dent

SMALL businesses are continuing to look to the banks rather than alternative sources of finance when they need credit, despite experiencing ongoing problems in accessing extra money.

A study of financial issues facing the SME sector, carried out by the Forum of Private Business (FPB), found that an overwhelming 94% of those questioned considered improved access to finance as important or very important in restoring business confidence. However, 43% said their cash flow has worsened in recent months, while working capital had declined for 41% and growth capital had deteriorated for 55%.

The main issue for more than half of those surveyed (54%) was rising costs, the same number as the FPB's previous cash flow and finance panel survey, carried out last September.

And the number who are continuing to face problems because of late payment has increased by 8% to 33%.

FPB senior policy adviser Alex Jackman said: "While some firms are seeing improvements to cash flow, working capital and growth capital many more are seeing these deteriorate and are looking to the banks to provide the finance for growth in order to boost business confidence and drive economic recovery.

"Small business owners are likely to feel vindicated that the banks are being taken to task given the experiences they have had in recent years - but clearly mainstream lenders remain centrally important in their eyes. …