Profitable SMEs are going bust because of a lack of credit, warns IT entrepreneur
"Bank lending to SMEs has gone into reverse throughout Europe. If something isn't done about it business growth will disappear," warned Gary David Smith - co-founder of Prism Total IT Solutions.
"I know personally of several profitable business that have seen their bank charges rise in the last few months and the Bank of England has reported that many small businesses are losing their overdraft facilities completely," said Mr Smith - whose company supplies complete IT support to over 1,000 SMEs nationwide.
The Bank of England's published a survey into business conditions in Britain which says that SME's are reporting to them that if they have managed to find a loan, interest rates and fees have been increased 'over the last few months'.
"Banks are happy to lend to big businesses because they can make their money on charging for all sorts of other banking services. But for small business, even profitable ones, the situation is dire," said Mr Smith.
"It is Britain's SME sector that will have to fuel our financial recovery and create the new jobs that we so desperately need. Without credit that is going to be virtually impossible," he said.
"Of course, everyone understands that banks have to put more aside than they did to guard against collapse but lending to profitable businesses at a reasonable rate is the bedrock of what their business is," said Gary David Smith.