Concerns over access to finance growing, says report
SEVEN out of 10 of privately held businesses (PHBs) in the UK are concerned about the current availability of finance, according to research by business and financial adviser Grant Thornton.
The study forms part of Grant Thornton’s International Business Report (IBR), which canvasses 7,200 businesses across 36 countries.
In the UK it sought the opinions of chief executives, managing directors, chairmen and senior executives of 600 large and medium-sized businesses.
It found that around 60% of business leaders are worried about the lack of credit. However, the study showed that EU nations are much more negative about the availability of finance.
In Greece 75% of respondents said they were concerned while in France and Ireland it was 80%.
The least negative are the Danes (27%) and the Italians (28%).
PHBs in many of the world’s developing nations expect finance to be more readily available with only 22% in India, 33% in the Philippines, 42% in Taiwan and 51% in China believing finance will be less accessible.
Ian Marwood, who heads Grant Thorntons corporate finance team in Yorkshire, said that a critical point had been reached in the economic cycle.
“This is now a very real issue for much of the mid-market where I would expect to see the first signs of recovery,” he said.
“For the majority of businesses it’s proving difficult to maintain their existing bank facility; it’s very difficult to raise new finance and it’s virtually impossible to approach a bank where there is no existing relationship. For some companies it’s a question of limiting growth plans; for others it’s threat to their economic viability.”
Mr Marwood said that people understood the banking sector’s caution and that no one expected a “return to practices” that had led to the current crisis.
However, he warned that if the entrepreneurial spirit and flexibility of the mid-market was to lead the UK out of the downturn, lenders had to assess risks properly and be prepared to lend appropriately.
“The real test of lender support will be illustrated in the coming months as businesses renegotiate their banking facilities,” Mr Marwood continued.
“The last government injection of funding into the banks was on the basis that lending would resume and that now has to start coming through.
“Those perceptions of course reflect the different economic, political and cultural characteristics of each domestic market but also the confidence of the lenders themselves in the prospects for their own domestic economy.”
