1 in 10 SMEs 'forced to borrow from family'

Users of time billing software may be interested in new research which indicates that as many as 540,000 small and medium-sized enterprise (SME) owners are being forced to borrow from friends and family because bank credit has dried up.

The survey by Close Invoice Finance (CIF) found that just six per cent of firms felt confident that their bank would extend new finance to them in 2009.

At the same time last year, the figure stood at 73 per cent.

CIF chief executive David Thomson said the figures demonstrate that the relationship between banks and SMEs has collapsed under the weight of the economic crisis.

"With banks now closing their doors to SMEs, owners are relying on friends and family for financial support, placing immense pressure on these most precious relationships," he added.

In this environment, Mr Thomson said it is essential that small firms become "far more creative" about accessing finance, while also being "deadly serious" about tackling late payment and other time billing issues.

According to a recent report from the Federation for Small Businesses, only eight per cent SMEs have been able to access bank loans underwritten by the government's Enterprise Finance Guarantee scheme.

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