Tighter lending terms persist for small business bank accounts

Small business bank account holders are still feeling the heat from their banks due to higher charges on business loans.

Fresh findings report in a  new survey conducted by the ICAEW (Institute of Chartered Accountants in England and Wales) that 58 per cent of small and medium sized business enterprises have encountered higher interest rates and administrative fees whilst renewing their business loans at debt facilities compared to their previous lending agreements.

ICAEW’s head of enterprise Clive Lewis commented on his organisation’s findings, who explained that the global economic crises has emphasised how important it is to now have more sound financial management.   Lewis continued, pointing out that while as a result of the increased discipline being practised by UK financial institutions there is now a decreased demand by firms to engage in high-risk behaviours such as extending their debt, another consequence of the new discipline is that small business owners have to now pay a premium for those same business loans.

17 per cent of the over 1000 companies surveyed by the ICAEW reported that due to the difficulty inherent in handling the increased fees and interest rates, their plans for short-term growth have been curtailed.

43 per cent of respondents have decided that cutting costs is the key to sustaining their businesses successfully, according to the survey.  At 45 per cent, a nearly identical number of businesses are planing to reduce their working capital, and at 53 percent, over half of all businesses surveyed by the ICAEW have decided to rely on their debt financing already in place.

Established by a Royal Charter in 1880, he Institute of Chartered Accountants in England and Wales boasts a membership of over 130,000 chartered accountants and students.  More information can be found at   ICAEW’s website.

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