Oct 24 2012
Almost three quarters (71%) of small and medium sized enterprises (SMEs) have seen their overdraft limits reduced by their finance providers. Yet, almost half (48%) state that they rely heavily on this resource to keep their business afloat, according to a new study by ABN AMRO Commercial Finance.
Peter Ewen, Managing Director of ABN AMRO Commercial Finance, comments, “It’s deeply concerning that SMEs are operating in such a changeable finance environment. Financial stability is one of the most important precursors to growth, so SMEs’ over-reliance on overdrafts could be putting them, and broader economic recovery, at risk.”
Living on the edge
Despite the danger of facilities being reduced, overdrafts continue to provide a vital backstop for a large number of businesses. The majority of UK SMEs (89%) say they would survive for less than 3 months without their overdraft.
Four fifths (82%) of SMEs say they rely on their overdraft to cover unexpected costs. More than two thirds of businesses (67%) depend on them to cover ‘cash flow gaps’ which 61% identify as a serious threat to their business.
SMEs’ demand for finance is also pushing the boundaries of their overdraft facilities, with an overwhelming majority (92%) admitting to breaching their agreed overdraft limit at least twice a year. On average, they admit to having spent 20% of the
We recommend you visit the following site for more complete information and related topics. Article source: http://www.creditman.biz/uk/members/news-view.asp?newsviewID=16801&id=1&mylocation=News&chksrc=NNow4251