Businesses defined as being as having “critical” financial problems by Begbies Traynor fell 39pc year-on-year to 3,001 in the second quarter.
Julie Palmer, a partner at Begbies Traynor, said the figures were the “first real sign” of the UK’s economic recovery, but warned that many businesses were unfairly being labelled as “zombies” due to being “chronically under-funded”.
“We have real fears that many SMEs will have serious financial difficulties at the time they least expect – during a recovery. Our experience has shown time and time again that many SMEs run out of cash during the recovery phase, as there is a real temptation to overtrade,” said Ms Palmer.
One of the largest decreases in financial distress was among food and beverage companies, with the number of businesses experiencing severe problems falling by 46pc, while industrial transport of logistics firms recorded a 43pc reduction, reports The Telegraph.
Begbies Traynor’s “Red Flag” report comes as the authorities increase the pressure on major UK banks to increase up their lending to smaller businesses.
The latest Bank of England figures showed that net lending by banks shrank by £300m in the first quarter of the year and by £1.8bn from June 2012, despite the launch of the Funding for Lending Scheme that was intended to funnel cheap money to lenders in return for them increasing their support to businesses and home buyers.
