Training Blog

So we’ve all heard about the impact the credit crunch is having on big chains like Woolworths but how is it affecting small businesses?

Small UK firms are struggling to get the loans they need to grow or even survive. A lack of funds means that banks are being more selective over who they lend money to, the Federation of Small Businesses (FSB) says: “Those who could get loans now faced paying interest rates in excess of 10%.”

Matthew Knowles claims that: “one of the reasons Banks often see small businesses as more of a risk. The issue is that the banks are being more choosy over who they lend money to until they ride out the storm.”"The reason that banks tend to see small businesses as more of a risk – and because they aren’t able to tick all the boxes which the banks set out, they struggle to borrow.

The credit crunch has followed woes in the US sub-prime mortgage sector, which specialises in loans to people with poor credit histories or on low incomes. Rising interest rates have led to record levels of loan defaults and home repossessions – and that has sparked fears about which lenders might be exposed to the bad debts.