Recession Causes Change In Business Loan Attitudes
The effects of the recent credit crunch and following recession have caused huge problems for many people in the UK. Apart from individuals facing financial difficulty, a large number of businesses, both large and small, have had enormous problems in obtaining the finance they require to through business loans and other types of credit, in order to sustain their business.
The Confederation of British Industry (CBI) has announced that the effects of the recession and lack of loan availability is likely to alter the shape of business in the UK on a permanent basis, even if the economy returns to a position where banks are once again offering cheap loans as they were prior to the credit crunch.
In a new report, entitled “The Shape of Business- The Next Ten Years”, the CBI has described the credit crunch as a catalyst for change in business attitudes. It is anticipated that the main change will be a non dependence on business loans from banks and other credit from suppliers and to customers, as most businesses do not expect business loans to return to pre recession levels and costs. This is likely to lead to a stronger relationship with suppliers and customers, as well as creating better accountability.
Richard Lambert of the CBI said “We may be at the start of a new era for business, in which attitudes to finance and to corporate leadership are changed for a generation by the shock of the past two years. What we now need is a more balanced, less risky pathway to growth, one in which the short term returns may be lower, but the long term rewards for management success will be a lot more sustainable and secure.
There are important questions around how businesses are going to finance growth and investment in the future. And in a more collaborative, less transactional world, closer relationships with customers, suppliers, employees and shareholders look like becoming the new norm.”
