With bankers keen to reduce their risks, small business overdrafts appear high on their hit list.
The figure comes from recent data analysis conducted by the Bank of England, and points to a post-credit crunch panic to tighten up on lending.
Tellingly, overdrafts began being cut at £5m per day during 2011, with the UK still struggling its way out of recession. Since then though the trend has continued – despite growth returning – with little apparent let up in the overdraft cuts…
In addition to the Bank of England’s research, Funding Options investigated the trend, their own research suggesting that one in five small businesses have seen their overdrafts removed altogether.
A total of 30 per cent had seen reductions imposed in the last 24 months, whist a similar study by the Forum of Private Business has pointed to a decline in overdraft usage. According to their research, usage has dropped from 25 per cent in 2011 to just 17 per cent this year.
Speaking on his company’s findings, Conrad Ford, Founder and CEO of Funding Options said "The withdrawal of overdraft facilities is a significant problem for SMEs. A big reduction in the level of working capital available is not just a one-off blow for a small business but presents on-going problems until replacement funding is found or built up.”
Have you had your overdraft reduced or completely removed? Tell us your story in the comments section.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
22 June 2020 • 9-minute read
How to start a clothing business. It can be an all-consuming process but with that first sample run and customer sale comes great…
6th Floor99 Gresham StreetLondonEC2V 7NG
Sol House29 St Katherine's StreetNorthamptonNN1 2QZ
© Copyright 2021 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.