Small companies urged to review finances as bank lending tightens

Small companies urged to review finances as bank lending tightens: "A law firm has urged small companies to review their finances after the Bank of England revealed that cash balances held with banks has dropped for the first time in a decade.

Law firm Mace & Jones said it is concerned that early next year bank support could start drying up leaving cash strapped businesses stranded.

Mace & Jones corporate recovery and insolvency partner Dominic Vincent said businesses could not rely on banks to bail them out and need to start reviewing their finances as a matter of priority.

“As the Bank of England figures show both businesses and banks finances are under pressure,” he said. “This is bad news for small businesses and there is an urgent need for firms to tighten their belts and their credit control systems. The next six to eight months could be a rough ride. The banks are likely to be unhelpful as cash is tight and demand for extra cash from corporate customers is intensifying. Furthermore this is against a backdrop of the Financial Services Authority urging banks to hoard funds while the Treasury wants banks to step up mortgage lending. The bottom line is there is less cash around for SMEs.”"

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