Monday, June 17, 2024
HomeNEWSBanks 'must rethink overdraft cuts to small businesses'

Banks 'must rethink overdraft cuts to small businesses'

Close Brothers Motor Finance has warned of “significant challenges” facing motorcycle dealers because of cuts to overdrafts by high street banks.

Overdrafts for small firms are being withdrawn or reduced by the banks at an alarming rate, it has emerged, restricting working capital and thus hampering the growth of hundreds of thousands of small British businesses.

About 17% of the UK’s small-to-medium-sized enterprises (SMEs) have reported that their overdrafts have been removed and 30% have seen reductions imposed over the past two years, according to a survey of 250 business owners.

Separate data from the Bank of England showed that £5m-worth of SME overdrafts have been cut every day since 2011, as banks seek to reduce the risk on their balance sheets.

James Broadhead, CEO of Close Brothers Motor Finance, said: “The increase in lenders cutting small-business overheads is  placing large financial pressures on UK dealerships. On a daily basis, small-business owners like our dealers are juggling commitments, from retaining and developing an effective workforce to competing to attract customers through their doors in an increasingly digital business environment.

“Without the necessary finance they need to grow and develop their business, small dealerships face significant challenges in keeping up with their larger counterparts and maintaining a healthy level of income. For many of our dealers this is an enormous concern.

“Therefore, we call on lenders to rethink their approach to overdrafts for SMEs. Rather than putting more pressure on these businesses, lenders must do more to support their growth and help them make valuable investments in the future of their business.” 

www.closemotorfinance.co.uk

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