A financial advisor has warned business owners to be on the alert for a ‘cull’ in lending as banks withdraw funding.
Menzies Active Finance (MAF) said banks may pull out of funding businesses they consider ‘risky’ in the near future.
Alison Henshilwood, corporate manager at MAF, said troubled economic times and a lack of confidence in the banking system have created a nervous, risk-averse lending climate.
“This is a natural course of events, to be anticipated under these circumstances, but it does pose tough challenges for businesses,” she said.
“Many banks are reviewing existing clients and, in some instances, withdrawing existing facilities such as overdrafts and loans.
“This is putting those businesses affected under immense pressure as they seek replacement funding. In the worst cases, it is giving businesses little option but to shut down.”
Henshilwood urged businesses to review their financial housekeeping and to seek independent advice on funding alternatives ‘sooner rather than later’ to avoid being left in the lurch at a crucial moment.
“Our experience is telling us sectors such as recruitment, property and retail are more at risk than others of having banks withdraw funding,” she said.
“The good news is that, providing balance sheets are up to date and sound, and financial housekeeping is in order, there are other funding options available.”
© Crimson Business Ltd. 2008
