Black September: what does it mean for you?

The week's financial turmoil is quite a spectator sport - but what does it mean for the owners of the UK's SMBs?

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Last Updated: 31 Aug 2010

The crazy gyrations in global stock markets and the crashing to the ground of mighty investment banks certainly make compelling viewing. But the current uncertain economic climate makes raising funds more difficult for many entrepreneurial businesses. Still, it's not impossible. The finance is out there, it's just harder to get at. After all, who would you rather have lent money to: Lehman Brothers, or a 25-person outfit with a steady growth curve, a nice order book and carefully managed finances?

Last month's survey from Cambridge University's Centre for Business Research found that 29% of those seeking finance in 2007 were wholly or partially rejected, compared with 26% in 2004. The really surprising statistic, however, was that the average amount sought had soared from £82,000 in 2004 to £470,000 in 2007.

These rejection figures are likely to rise considerably as a result of the events of Black September. With HBOS absorbed by Lloyds/TSB and many other banks paralysed with anxiety, the bank that likes to say 'no' is to the fore at the moment. The fewer banks that trade out there on the high street, the less competition, so the harder the deals they will force on business. Those seeking to raise finance against their own homes are likely to find things far tougher, as well.

However, far worse than access to finance is almost certainly the deadening effect of the whole wretched business on consumer confidence. Recession is now looming. And then there's inflation at a 16-year high to focus the mind as well. Yes, it's tin hat time.

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