Small Business Finance
A survey published in February 2009 of just under 1,300 small and medium-sized enterprises (SMEs) carried out for the Finance & Leasing Association by the Open University Business School revealed that SMEs have become increasingly concerned about cashflow, payments and debtors, seeing them as their second biggest problem after the economic climate. Nearly half (45%) of the firms taking part in the survey say they have not taken out a loan. Of those which do have loans, bank overdrafts are the most common, followed by other bank loans. But asset finance like hire purchase and leasing has become increasingly important as lending criteria tighten, rising from 25% of all loans in the third quarter of 2007 to 33% in the latest survey.
Among other key findings are that:
- Small retailers and construction firms have seen the sharpest fall in sales, and both sectors have cut jobs. The health/education/leisure and manufacturing sectors performed best.
- The smallest firms, whether measured by turnover or employment, have performed worse than their larger counterparts. Those with a turnover of £100,000 have, on balance, seen their sales fall, while those with a turnover of half a million or more have more often seen sales rise.
- Pessimism about future sales is most marked in the agricultural, transport/travel and wholesale sectors.
- Worsening economic conditions mean that more small firms have needed extra capital over the past year to manage cashflow or bad debts than to fund growth.