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ACE has called for urgent talks with banks on prioritising affordable credit for small businesses. Historically low interest rates are not being passed on to businesses, and over half of ACE members have reported that credit has become more difficult to obtain than in 2008. Unrealistically expensive credit is having serious repercussions on the consultancy and engineering sector, particularly due to private sector projects being delayed or abandoned because of lack of finance.
Responding to the 2009 ACE State of Business Survey –due to be published in September– 51 per cent of member firms said that the terms of credit had become more onerous. Fewer than a quarter believe that this situation is sustainable. This damning situation is affecting businesses across the UK but is particularly bleak in Northern Ireland, where businesses have resorted to compulsory redundancies and four day weeks in order to survive.
Despite an apparent growth in lending volume, businesses are still concerned that well-managed risks are being overpriced. ACE will be writing to the Government Lending Panel to raise these concerns, and will also urge the Government to accept the findings of the Rowlands Growth Capital Review later this year.
ACE chief executive, Nelson Ogunshakin, commented: “Small businesses are the lifeblood of the UK economy, and of our industry. The public purse cannot afford to fund everything, and action must be taken now to encourage private sector activity. Otherwise, some good engineering consultancies and skilled engineers will be lost to the economy.
“Evidently we do not want to see a return to reckless lending and unsustainable growth. However, failing to make affordable credit available to small businesses will further jeopardise the health of UK plc and slow the recovery. Banks must take the lead and enable small businesses to flourish.”
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Further information from ACE senior communications executive Piers Nutbrown on 020 7202 0255, or email pnutbrown@acenet.co.uk
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