One in ten firms have had overdrafts cut says Close Brothers

Close managing director Steve Gee said that with overdrafts often providing an essential lifeline for SMEs, many had experienced difficulty in accessing finance from their banks in recent years and it seemed that many SMEs were relying on overdrafts alone to fill the cash flow stopgap. He continued: "While this strategy may be sufficient in the short term, it's risky as banks may not be able to guarantee consistent funding. The reality is that SMEs may struggle to sustain operations in the short term with even a minimal reduction in the finance they have at their disposal." The survey also revealed that over half of those polled in the manufacturing industry would not consider using asset finance as a means of helping their cash flow, mainly because they didn't understand the products. Gee added that manufacturing firms often had cash 'hidden' in their companies assets and such products could be a real lifeline, enabling capital to be released back into the business to boost to cash flow.