Management expert highlights business credit concerns

Date: 14th October 2009

Loan availability for limited companies affected by the credit crunch needs to be increased, the Cranfield School of Management has said.

David Molian, lecturer in enterpreneurship at the institution, said that many more firms could face severe financial difficulties due to only being able to find expensive credit from banks.

The nation's financial firms have imposed tougher credit criteria on both consumers and business customers as a direct result of the global financial crisis and economic downturn.

Moreover, figures from accountants UHY Hacker Young and law firm Trowers & Hamlins, released earlier this week, showed that many limited companies are delisting from stock exchange AIM as a direct result of their own financial distress.

In all, balance sheet-related problems were responsible for 41 per cent of total delistings over the third quarter of 2009.

Mr Molian commented: "I think those businesses which are now going under have been fighting to get in every last penny and protect every last penny and now there is no more cash.

"[The government] should do everything they can to get credit into the market."

This year, the Bank of England slashed interest rates to an all-time low of 0.5 per cent and embarked on a £175 billion programme of quantitative easing, in order to ease credit conditions in the UK.