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Lack of credit forcing SMEs into administration

A lack of credit is forcing profitable SMEs into administration, according to a UK entrepreneur.

Earlier this week the Bank of England published a survey into the UK business conditions, which indicated that SMEs who have managed to find a loan have found at interest rates and fees have been increased over the last few months.

Gary David Smith, co-founder of Prism Total IT Solutions believed that if sometning isn’t done about the reversal of bank lending to SMEs, there is a danger that business growth will disappear.

He commented: “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 loosing their overdraft facilities completely.

“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.”

He is now calling non banks to provide much-needed credit to SMEs, who have the potential to stimulate the UK economy.

According to a survey by Experian more than 50 companies fail every day. 1,564 companies became insolvent in April and 688 of them had ten employees or less.

“Of course, everyone understands that banks have to put more aside than they did to guard against collapse but lending to profitable businesses at a reasonable rate is the bedrock of what their business is,” Mr Smith added.

This was posted in Bdaily's Members' News section by Ruth Mitchell .