Banks ‘unsupportive’ – new figures
THE number of businesses which believe that banks are being unsupportive has increased, according to a new report.
Insolvency trade body R3’s Business Distress Index, which looks at the financial position of GB businesses, reveals that one in four (24%) businesses strongly disagree with banks being supportive, up 7% on September 2010 figures.
The quarterly report also shows that one in four businesses are concerned about their debts.
Over the last quarter, worry has intensified amongst businesses that are concerned about debt, and small businesses seem particularly vulnerable.
Forty-three percent of businesses concerned about their debts are now worried about bank loans and finance debt. This compares with just 24% in September 2010 – a 19% increase.
Andrew Walker, chairman of R3 in Yorkshire and partner at law firm Irwin Mitchell, said: “The increase in the number of businesses who no longer feel that banks are being supportive indicates that a growing proportion of the business community are either struggling to service their existing debts or finding it hard to acquire further lines of credit.
“As we have seen in previous recessions, once the economy begins to show signs of recovery creditors tend to make a more concerted effort to pursue those who are indebted to them and tighten up their lending facilities.
“However, we are still in the early stages of recovery and it takes time for this to translate into tangible relief for businesses. For the many businesses that used all their reserves to survive the recession, supportive creditors are more important than ever.”
According to the index businesses perceive trade creditors to be the most supportive but less so then they were six months ago.
HMRC was perceived to be the most supportive creditor last quarter but are now second, with the banks being seen as the least supportive creditor.
Mr Walker added: “Insolvency practitioners working with distressed businesses are seeing an increase in the number of Time to Pay applications being rejected. This may well explain why HMRC is no longer seen as the most supportive creditor.”
