Despite ongoing concerns over cashflow, new research suggests that business confidence is beginning to return.
In the latest survey by the Forum of Private Business (FPB), more than a quarter of firms reported an improvement in the viability of their businesses over the past month – twice the number who thought that their prospects had worsened.
Furthermore, although 18% of respondents said that bank support had deteriorated and just 12% reported an improvement, this marked the highest level of satisfaction with the banks since November 2008.
Phil Orford, chief executive of the FPB, commented: “There are signs that business confidence is returning. Significantly more business owners can see a future for their companies than are pessimistic about their chances of survival.”
Orford said indications that bank lending conditions had marginally improved was likely to be the reason for this confidence boost. The survey showed that overdraft provision was more favourable for 8% of businesses and had worsened for just 3%.
“Although there is still more dissatisfaction with lenders than there is approval of them, more struggling small businesses are reporting positive experiences,” he said.
“This must be nurtured by further measures to address the cost of lending, which remains restrictive, and by policies from the government to stimulate the economy and protect both employers and employees.”
The interest rate for overdrafts was found to be 6.6%, on average. While this represents a fall of 0.2% since April, it is still well above the Bank of England base rate of 0.5%.
The average rate for loans is still 6.4%, but the survey suggests that fewer banks are demanding additional security for lending than they were earlier this year.
© Crimson Business Ltd. 2009