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With the economy continuing to show signs of recovery, more SMEs are feeling confident about their future. However, this doesn’t mean they are all completely stable, as recent research shows that a growing number are exhibiting financial difficulties.

A lack of funding opportunities and a rise in interest rates could lead to some requiring corporate recovery advice.

Financial Problems Growing

The Begbies Traynor Red Flag Alert for the second quarter of this year shows that there has been a 34% rise in the number of businesses suffering ‘significant distress’ in their finances. In this quarter, 237,361 businesses fell into this category, compared with 176,766 for the second quarter of 2013. This makes it the third quarter in a row that the figures have increased.

Over 217,000 of these businesses were SMEs, with a 40% rise in the number falling into ‘significant distress’. Even though there are an increasing numbers showing signs of financial problems, SMEs remain optimistic about the future. This is one of the key areas that could help to boost the jobs market, so it’s important that it remains supported through government initiatives and financial institutions.

Confidence Rising
SMEs are generally looking for ways to invest in and grow their businesses. The lack of suitable funding opportunities has let them down, but many now feel confident about the possibility of securing loans from major banks.

New research found that 60% of SMEs think a bank would approve their application for an investment loan. This confident attitude means that 37% of these businesses are more inclined to invest than they were last year. To help secure their future, 35% of them had lowered their debts.

There is definitely a belief and a desire from the business community regarding investment. However, uncertainties remain, especially around any future interest-rate rises. Companies need to ensure that any new debts are future-proofed to avoid the need for corporate recovery advice when rates do inevitably go up.

At tri group we can offer companies a range of accountancy and advisory services through the life of their business. Whether you’re looking for support with business planning and raising funds or corporate recovery advice, contact one of our team for further information.