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Credit squeeze forces cuts to secured lending
Banks and building societies are reporting an expected cut in the amount of secured lending they will offer after the Bank of England admitted the credit squeeze is set to intensify.
The credit crunch is forcing some lenders to take fewer risks whilst at the same time, the cost of borrowing on the money markets remains high. As a result, SMEs could find it difficult to secure traditional loans or receive overdraft facilities from their bank.
However, David Robertson, chief executive, Bibby Financial Services is urging owners and managers to stay positive. He says: “Many high street banks neglect to understand the challenges faced by SMEs and in light of the credit crunch banks are imposing stricter lending criteria that owners and managers simply cannot meet.
“Invoice financiers, such as Bibby Financial Services, take a much more in-depth view of a clients business and also take into account the entire financial make up when making funding decisions. In addition, extensive credit history is not required with the sales ledger of the business used to secure its access to funds.
“Owners and managers can access an immediate and ongoing supply of cash by releasing up to 85 per cent of the value of sales invoices. This could make the difference between boom and bust as firms have access to vital cash tied up in invoices and can continue to pay for essentials such as staff and materials.”
