Business
Impact of credit crunch beginning to show
14th March 2008
James Cowper give their view
The implications of the credit crunch on UK business appear to be starting to show. According to the Bank of England, one of the continuing drivers has been a ‘hoarding’ of liquidity by many of the larger lenders and ‘uncertainty about funding commitments to corporates.’
As a result, UK firms looking to raise money may have to start exploring alternative methods of finance, says Thames Valley accountants and business advisers, James Cowper.
“In the current economic climate, banks and finance companies are becoming more cautious about who will they lend to,” said Brian Duffy, of James Cowper Asset Finance.
“If a business needs to finance an asset – particularly a non-standard asset – the door can be closed to them very quickly. What companies need to appreciate is that there are other options.”
Companies who are experiencing problematic trading conditions may also consider re-financing assets to help with cash flow and get them through difficult periods.
“Often a business will be asset rich but cash poor,” said Mr Duffy. “They might have a whole factory stacked high with equipment and goods but lack of cash makes doing business difficult.
“It may be in their interests to re-finance the assets they have and borrow money against them at competitive rates.”
Leasing is particularly suitable for assets such as vehicle fleets, IT, plant and machinery, start-up businesses and for more intangible assets such as re-fits for pubs and restaurants.
On a positive note, alternative sources of finance are also useful if a business is expanding. James Cowper Asset Finance has recently completed a £1.1 million deal for Thames Travel, Wallingford who, after winning new contracts, needed to add ten buses to their fleet.
“James Cowper Asset Finance can negotiate good lines of credit and will finance assets which banks and finance companies aren’t interested in, particularly when they are operating in a stricter lending environment,” added Mr Duffy.
More From: Business News Next Story: Designer award for Gemma Previous Story: Newbury law firm aims for strong community relationship