Profitable SMEs going bust due to lack of credit, warns entrepreneur – Business Money Article
Bank lending to SMEs has gone into reverse throughout Europe, and if something is not done about it, business growth will disappear.
This is the warning from entrepreneur Gary David Smith, co-founder of Prism Total IT Solutions, which provides IT support to more than 1,000 UK SMEs.
He said: “I know personally of several profitable business that have seen their bank charges rise in the last few months, and the Bank of England has reported that many small businesses are losing their overdraft facilities completely.
“According to the Bank of England’s survey into business conditions in Britain, SMEs are reporting that if they have managed to find a loan, interest rates and fees have been increased over the last few months.
“Banks are happy to lend to big businesses because they can make their money on charging for all sorts of other banking services. But for small business, even profitable ones, the situation is dire. It isBritain’s SME sector that will have to fuel our financial recovery and create the new jobs that we so desperately need. Without credit that is going to be virtually impossible.”
A new survey by Experian found that more than 50 companies fail every day; 1,564 companies became insolvent in April 2013, and 688 of them had 10 employees or less. An annual report into financing SMEs from the Organisation for Economic Co-operation and Development concluded that small companies are going to face credit difficulties for some time.
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