Most Small Firms Unaffected by Credit Crunch, claims BCC
The negative impact of the credit crunch on small firms has been over emphasised, as the majority have not struggled to access funding, according to the British Chambers of Commerce (BCC).
Despite widespread predictions that the credit crisis would make it harder for businesses to access finance, BCC research has revealed that 57% of SMEs are not finding it any more difficult to secure funding. In addition, 60% of respondents have not changed their plans to expand their businesses in 2008.
“What has impressed me over recent months has been the amazing resilience of small firms,” said BCC director general David Frost. “If you live in London you would often be left with the impression that the economy was about to fall off a cliff. From my visits around the country, I can assure you it is not.
“Small firms understand that the current global credit difficulties will impact, but they tell me that far too much attention is paid to what happens in the Square Mile and Canary Wharf, not the real economy elsewhere,” he added.
The BCC’s positive findings contradict earlier predictions that this year would see a rise in business failures.
Credit reporting firm Equifax found there was a 5.7% increase in business failures in the last three months of 2007, compared with the same period in 2006, and forecast that this was a start of a trend that would get worse in 2008.
Credit crunch provides silver lining for retailers
Retailers’ transaction costs have reduced over the last year, as increasing numbers of consumers are making their purchases with cash rather than credit cards, according to the British Retail Consortium (BRC).
BRC research revealed that cash is now used for 60% of retail transactions, compared with 54% 12 months ago.
The BRC also revealed this could benefit small retailers as, on average, they are charged two pence for processing cash transactions, but eight pence for debit cards and 34 pence for credit cards.
“Retailers could benefit from an increased use of cash,” said BRC director general Stephen Robertson. “Hard-up customers are increasingly reluctant to spend money they haven’t actually got in their hands. While total retail spending continues to grow, there is a widening gap between the amount spent in cash and the amount spent using cards, suggesting customers want to keep tight control of their finances.”
© BHP Information Solutions 2008