The credit crunch is having an effect on lending and cashflow for SMEs across the West Midlands – but the appetite for growth and investment is still there, it is claimed.
Business Link in the West Midlands, speaking after a workshop with key partners, funders and intermediaries, is adamant that the region is still in good shape for economic growth and has called for support agencies to work even closer in promoting how companies can access expertise in crucial business issues and in raising much-needed finance.
The organisation also stressed the importance of making sure firms in the area take advantage of the Business Health Checks it provides and a more dedicated approach to making sure start-ups are not put off by the tough trading conditions.
Anthony Andrews, sector manager for business and professional services, who organised the event, said: “There has been a lot written about the impending recession and the effects the credit crunch is having on the economy and we wanted to hear from people on the ground about what is happening.
“Over 100 people were involved in the workshops and a lot of information came out of it that will help us to develop the service we provide to entrepreneurs and established companies.”
He continued: “I think the key message is that whilst conditions are difficult, it is nowhere near as bad as being reported and that a lot of businesses are still looking to grow.”
The major changes in recent months have focused on the lending criteria of banks, with even the larger deals and private equity transactions being subjected to tighter guidelines.
These restrictions are already impacting on West Midlands SME, with cashflow set to suffer as companies hold onto payments for longer and personal investment is set to drop as it becomes more difficult to get mortgages, personal loans and credit cards.
Also in the spotlight was the construction, retail and the licensed trade sectors, who were singled out has the most affected industries.
“It was not all doom and gloom,” said Mr Andrews. “The majority of participants were in agreement that the situation was not as bad as the media portrayed and a lot of people were finding that day-to-day activities were continuing as normal and that consumer confidence is expected to rise.”
He added: “Community Development Finance Institutions (CDFIs), a great way of sourcing funding, are certainly busier and we are seeing a concerted increase in the number of grant applications being made. There is also a growing desire to move into accessing non-traditional financing, such as Islamic banking.”
Business Link in the West Midlands will use the information from the workshops to tailor the support it provides to companies in the region.
It currently has over 140 advisers on the ground to address business issues and opportunities that have emanated from the credit crunch, not to mention providing a robust online Health Check (www.businesslink.gov.uk/healthcheck) tool.
“We have to make sure that everyone who can benefit knows what we offer and, in particular, how they can access our successful Access to Finance scheme,” said Mr Andrews