Close Invoice Finance warns of loans squeeze

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Confidence in banks among small and medium sized entreprises SMEs has collapsed, Close Invoice Finance said today.

According to the financial firm, just one in 20 firms now trust banks to keep on lending them money in 2009 - down from three in four in 2008.

The report also revealed that around 540,000 desperate SMEs are currently seeking out loans from friends and family.

Banks have cut down on their lending to both businesses and consumers as a result of the global credit crunch.

This has meant that previously credit-worthy customers have been shut off from being lent to.

David Thomson, chief executive of Close Invoice Finance, said: "The relationship between banks and SMEs has collapsed with severe repercussions for the sector as a whole.

"With banks now closing their doors to SMEs, owners are relying on friends and family for financial support, placing immense pressure on these most precious relationships."

The Close Invoice Finance research showed that only one in twenty small firms currently believe that their bank loans would remain problem-free in 2009.

In 2008, this total stood at around 75 per cent.

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2009-02-20 12:59:42 © Moneyextra.com