SMEs “massively cautious” as they rule out borrowing

The vast majority of SMEs in Wirral and Cheshire have no appetite for lending, according to a leading accountant.

Phil Bates, Principal of Neston-based chartered accountants Phillip Bates & Co, said the current economic uncertainty was to blame.

Phil said: “Even though money is cheap to borrow at the moment, entrepreneurs have got little desire to go to the banks.

“Given the continuing uncertainty following the Brexit vote, business owners do not have the confidence to invest as much as many would like to.

“If anything, they are going the other way, either building cash in their businesses or taking the opportunity to put more money into their personal pension schemes.”

Phil added: “If entrepreneurs are not willing to invest in their businesses, the implications are severe for the wider economy. The current safety first strategy means companies are not investing in new machinery and equipment, recruitment, skills training and all sorts of other essentials in growing the economy.

“Some of my clients are considering exiting from their businesses five years earlier than would have previously been the case. In the case of family businesses, this means trying to bring through the next generation sooner than perhaps was planned.

“The single biggest factor in making businesses reluctant to borrow is Brexit and the lack of a clear plan as to the direction the UK is heading.

“This combined with still strong memories of the recession of a few years ago has made the majority of SME business owners massively cautious.”

The latest SME Finance Monitor report revealed that just under half of businesses considered themselves to be “permanent non-borrowers”.

Phillip Bates & Co and its sister firm, Phillip Bates & Co Financial Services, are one of only a small number of Chartered Partnerships in the region.

Leave a comment