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Small firms optimistic despite credit crunch
Small businesses are remaining upbeat about the year ahead, despite the gloomy outlook for the 2009 economy, according to Orange.
Research from Orange revealed that a fifth of small firms are optimistic about the next twelve months and a third believe it will be a hard start to the year, but will pick up later on. Only 32 per cent of small firms believe they will struggle to cope with the downturn.
"It is encouraging that over half the respondents of the survey are optimistic for 2009 or believe that things will pick up throughout the year," said Orange UK vice president for business, Paul Tollett. "We must ensure we do what we can to drive this optimism into action and get British business back on its feet."
The survey also found that only a quarter of small firms said their credit facilities had been affected by the economic downturn, while 36 per cent said their credit facilities had been unaffected and that they were confident that credit lines would remain unchanged in the coming year.
The Institute of Directors head of parliamentary and regulatory affairs, Alexander Ehmann, said it was unsurprising that firms were managing to remain buoyant about the coming year.
"There's no doubt that there have been some really testing economic conditions, and perhaps these will intensify in 2009, but so far it's not the Armageddon that has been painted by some," he said
"We've been struck by how positive our members have been, namely by preparing themselves for the worst by making 'easy picking' cutbacks and shedding unnecessary spending in areas like hospitality," added Ehmann. "For the moment, staffing levels are also holding up well and our members seem to be using skills development to maintain and sharpen their competitive edge."
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Banks commit to support SMEs
The British Bankers' Association (BBA) has revised its guidelines on bank lending to help small firms access the funds they need to survive the economic slowdown.
The rewritten Statement of Principles sets out guidelines which must be implemented by all UK banks that comply with the Business Banking Code.
The guidelines for the banks include contacting firms they believe are in trouble, offering to discuss all concerns in person, using their business assets to secure debt before considering personal assets, and helping customers to revise their business plans and forecasts.
"Small firms should see the benefits of these guidelines in the new year," said Federation of Small Businesses (FSB) head of parliamentary affairs Stephen Alambritis. "However, the evidence that we have had from businesses is that banks are currently still reluctant to lend.
"The Statement of Principles needs to be highlighted to branch managers - it is important that they are aware that their chief executives have signed up to this code, so that they put it into practice," he added.
The guidelines were revised following pressure from the Government for the banks to help firms that are facing financial difficulty.
"The Principles show that banks are committed to working with business customers to find ways of overcoming the difficulties they may face," said BBA chief executive Angela Knight. "They also emphasise that if the owners and managers of the business take early advice and action, they can work with the bank to sort out difficulties."
In addition, several high-street banks have announced plans to help small businesses, through a range of funding and support packages.
The Royal Bank of Scotland has promised that overdraft facilities for small business customers will remain in place for the next year, with no increase in overdraft costs until at least the end of 2009.
Barclays has stated that it will make an additional £1.5 billion available to its small business customers during 2009. It also pledged not to alter the limit or rate of business overdrafts, providing the borrowers do not have a significant change in circumstances. Meanwhile, HSBC has introduced a £1 billion working capital fund to help small firms.
"It's a tough business environment and we want to support our customers, whose continued growth will provide a stimulus to restore the UK economy," said HSBC UK managing director Paul Thurston.
- For more information on the revised Statement of Principles, visit the BBA website.
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