Finance a growing problem for firms

Oct 6 2009 by Karen Dent, The Journal

SOME small businesses in the region are reporting positive signs of growth but many are still experiencing problems finding finance to help them to expand.

A third of North East small firms quizzed by the Forum of Private Business (FPB) said they hoped to take on staff by September next year and one in 10 had already seen an upturn in trade, despite the recession.

More than half – 56% – said they expected trade to improve in the next 12 months, while 19% expected an upturn within six months and 12% within three months.

However, almost a quarter – 23% – said they were continuing to tackle staffing costs either by making people redundant, reducing working hours or cutting perks and bonuses.

Around 14% are planning expansion in the next six months and 46% within the next year but problems with finding finance from the banks is weighing heavily on many business owners’ minds.

Almost seven in 10 said lending terms and conditions had worsened this yea. The main gripe was that the cost of finance was higher and it was difficult to access working capital.

FPB spokesman Phil McCabe said: “The 8% of small business owners currently seeing an upturn in trade compares with 12% for the Eastern region, 17% for Scotland and 19% for the Midlands. However, with more than half of them expecting to be doing more business by this time next year, firms in the area are cautiously optimistic for the future.”