Insolvency Experts Warn Small Business Borrowers

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Insolvency experts have warned small businesses that arrears will lead to more aggressive bankruptcy proceedings now we are looking to leave the recession.

Figures released today by R3, the insolvency trade body, show that just one in three businesses feel that the outlook for the first three months of 2010 looks positive. Unsurprisingly, business confidence correlates to the business's size so while just over a third of small businesses are confident about the future, half of large firms are feeling bullish.

But the arrears experts are not so sure – less than 10% think that the outlook for business is bleak for the next few months. Peter Sargent, president of R3 says that "the early stages of an economy's recovery can be a dangerous time for businesses".

He says: "Interestingly, businesses seem more confident about the future than insolvency experts. Our figures show that, whilst 39% of businesses are feeling positive about this quarter, only 8% of insolvency experts are positive about the outlook for businesses for the same period. Insolvency practitioners know that creditors tend to act more aggressively as we come out of a recession and corporate insolvencies continue to rise."

It is true that once the recession has ended and the economy begins to pick up, banks will not be quite so happy to keep bankrolling failing business. If you think your business is struggling and worry that your credit lines might soon be cut, talk to an expert in small business finance. They will be able to help you get hold of new financial products, help you plan your finances and will make sure that the next few months are positive, rather than negative for you and your small business.

SOURCE: R3, 21/01/10

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