Credit Crunch Affecting Small Business Sector

Wed, 23 Apr 2008

Almost 40 per cent of small business owners and social entrepreneurs have experienced cash flow problems in the last few months due to on-going credit crunch, a new study has revealed.

Research carried out by leading social entrepreneur networking website UnLtdWorld.com has found that an increasing amount of small business owners in the UK believe their cash flow difficulties are related to the nation’s worsening economic situation.

The research, which queried 984 small business owners and social entrepreneurs over the current state of the economy, also found that small business owners are finding it more difficult to secure finance, with 68 per cent of owners who have recently applied for a business loan or credit card being turned down.

Just over 20 per cent said that areas of their business had been badly affected by the recent financial problems in the UK, such as a training, research and consultancy, due to a reduction in buyers’ budgets .

The research also suggested that enterprise in the UK could be affected by the recent tightening of lending criteria by banks and building societies as many entrepreneurs and small business owners use personal credit cards and loans to get their company up and running.

In fact, nearly 34 per cent of those surveyed said they had used personal loans and credit cards to fund their growth and start up costs .
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