Interest rate increase could crush almost 80,000 businesses
Even the smallest interest rate rise could prove disastrous for thousands of British businesses, a leading Sheffield insolvency expert has warned.
Paul Moorhead, of insolvency business turnaround and recovery practice Graywoods, says that latest industry figures point to a bleak future for companies struggling to maintain a hold on their finances. There are fears that thousands of businesses could be driven out of business if interest rates rise even marginally.
Those statistics indicate that four per cent or 79,000 businesses claim they would be unable to repay their debts if interests were to rise by a small amount, a figure four times the 20,000 businesses saying the same thing less than 12 months ago.
“The financial turmoil we have seen in recent years means interest rates have fallen to historic lows,” Paul pointed out.
“That might seem like a good thing but many businesses are now concerned that there might be a shift in the opposite direction at last.
“Such a move may sound unlikely but in uncertain times it is always a possibility and many businesses have no confidence in being able to protect themselves.”
Paul added that the first thing concerned business owners should do is a proper forecast to explore exactly what the impact of any interest rate rise would be.
“A lot of businesses need to invest in order to remain competitive and others may need to borrow but if that is the case they need to make sure they are borrowing money on terms they can afford and that can be sustained in the long term,” he said.
He pointed out that an estimated 25,000 businesses had admitted they were already struggling to cope with tough trading conditions.
“Even those companies, though, can do things to navigate themselves through troubled waters,” Paul said.
“The thing to remember is that it’s always all about planning and being prepared.”