Business Owners Starting to Feel Credit Crunch

In a sign that the credit crunch may now be starting to have an impact on the small business sector, research findings announced today by a leading social entrepreneur networking website has revealed that nearly 40%* of small business owners have said that they have experienced cash flow difficulties in the last few months and that they believe it is related to the worsening economic situation in the UK. commissioned the research and asked the small business owners and social entrepreneurs who have signed up to its website and across the web a number of questions about the current state of the economy. 984 people took part in the research and statistics go some way to proving that the credit crunch is now affecting smaller companies.
Along with facing day to day cash flow difficulties, it would appear that small business owners are finding it harder to secure finance with 68% of those business owners who had recently applied for a business loan or credit card being turned down.
21% said that their business had been badly affected by the recent financial problems in the UK such as a training, research and consultancy company who has faced difficulties in its industry due to a reduction in buyers’ budgets.
Andrew Hughes, of Survivor Services has been directly affected by the credit crunch, and said,
"I am a supplier to health trusts and local authorities and the fact that they are reducing expenditure markedly is having a really negative impact on my business and income. Companies are doing all they can to cut costs, which is great for them, but at the expense of small business owners like myself."
Enterprise in the UK could also be affected by the recent tightening up of lending criteria by banks and building societies given that many entrepreneurs and small business owners use personal credit cards and loans to get their company off the ground.
The research found that 34% of the business owners who replied said they themselves had used personal loans and credit cards to fund their growth and start up costs.
Speaking about the research Alberto Nardelli, Chief Strategist for UnLtdWorld said,
“We wanted to get a better understanding of the real financial position faced by many small business owners and social entrepreneurs. To some extent, the outlook seems quite bleak for now”.
“We had noticed an increase in discussions relating to financial difficulties across our social networking site and the research has presented us with a really clear picture of the extent of the issues”.