Traditionally business owners have turned to their bank manager when proposed expansion or investment has meant that they require additional funding for their business. The bank manager has normally responded by granting an overdraft facility or agreeing a medium term loan.
However the major high street bank are looking to shore up their severely weakened balance sheets and part of this process has meant a reluctance to lend (particularly to cash-strapped owner-managed businesses) and a significant hiking in their fees and charges in the process.
After the tsunami in the financial markets now comes the aftermath. With credit tightening, house prices falling and confidence out the window, the ‘R’ word is on everybody lips.
The technical definition of recession (two quarters of negative growth) is pretty meaningless but it becomes very real when people start losing their jobs and livelihoods, and businesses (especially small businesses) start to struggle.
There are two things that become all important in this hostile business environment: