Region’s firms suffer as overdrafts are cut
ONE in ten businesses in Yorkshire and Humberside have had their overdraft cut in the last 12 months, a new survey has revealed.
Of these firms, half claimed that the reduction has had a negative impact on operations, while a further 17% revealed that the cuts have stifled their plans for growth.
The figures come from the latest Close Brothers Business Barometer, a survey that canvasses the opinion of SME owners from a variety of sectors across the UK on a range of economic and financial issues.
Chief executive of Close Brothers Asset Finance, Mike Randall, said: “Overdrafts often provide an essential lifeline for SMEs. Many have experienced difficulty in accessing finance from their banks in recent years and are relying on overdrafts alone to fill the cash flow stopgap.
“While this strategy may be sufficient in the short term, it’s risky as banks may not be able to guarantee consistent funding. The reality is that SMEs may struggle to sustain operations in the short term with even a minimal reduction in the finance they have at their disposal.”
The Business Barometer also revealed that 64% of businesses polled in Yorkshire and Humberside would not consider using asset finance as a means of helping their cash flow. One of the main reasons cited was lack of understanding of the products.
Mr Randall said: “Given the situation with overdrafts it is a concern that many businesses are still unaware of all the funding options available to them or don’t feel that they are sufficiently knowledgeable about the range of products on offer. Over a quarter said they would not consider refinancing in any form as they are worried about risking their existing assets.”
He added: “We encourage businesses to look beyond the short-term and seek adequate, stable funding that will help ensure their long-term success while relieving the pressure on cash flow.
“Firms often have cash ‘hidden’ in their companies’ assets and products like refinancing or Sale and HP Back can be a real lifeline. You can release capital back into your business quickly, giving you an immediate boost to cash flow while you continue to use the asset without interruption.”
