Businesses urged to keep calm to ride the credit crunch

Apr 30 2008 by Tony McDonough, Liverpool Daily Post

‘BARRY FLYNN, senior partner at the Liverpool office of another accountancy firm, Ernst & Young, said the experiences of small firms in dealing with the banks varies widely from sector to sector.

"A lot does depend on what sector you are in and it also depends on the bank," he said. "If you are a niche manufacturer that is successfully exporting to Europe, then you may find you do OK when dealing with the banks. However, if you are in property, then it can be a different story.

"Companies who may have been considered a risky proposition anyway prior to the credit crunch can also have problems as can firms who are heavily geared (burdened with debt).

"It is very difficult to say how long this situation will go on for, though I would hope we are somewhere near the bottom.

"However, I can’t see things in 2009 being much better than they are in 2008."

One phenomenon that has emerged, according to a major Merseyside business support agency, is how the adverse publicity surrounding the credit crunch is putting off small or start-up businesses from approaching the banks in the first place.

Blue Orchid director Chris Brown said: "While the headlines are telling us that the banks are refusing to lend to businesses, this has not been our experience. Our business deals largely with businesses which have yet to launch, who are planning the finance for their start-up.

"We have noticed a new trend that businesses are not as eager to approach banks for finance, due to their anxiety of the current market.

"However, we do believe that, if you are equipped with a viable business plan, there is money available to SMEs.

"Interestingly, where our SME clients are feeling the pinch of the crunch is with their own cash flow, as their own clients are lengthening their payment terms."

tonymcdonough@dailypost.co.uk