Businesses hamstrung by tight lending

Article Category: Demographics

By Andrea Lavigne, 20 October 2009

The potential for private businesses to grow is there but the funding is not, according to PricewaterhouseCoopers.

Businesses recorded a rise in sales and profits in the last six months to October that is expected to trend upwards in the following months; however PwC found 90% of businesses have not been able to secure the necessary funding to facilitate that growth.

The Australian Financial Review reported private businesses recorded sales rises of 6.8% and profit rises of 5.8% leading up to October, largely due to prudent fiscal management during the global financial crisis.

This was evident by the debt ratio which fell from 41.3% in February 2007 to 31.2% in September this year.

One-third of businesses made staff redundant in the past year, while other businesses altered working hours for staff and forced employees to take unpaid leave.

PwC partner Gregory Wills stated that there was now a "real risk that [businesses] won't be prepared for the upturn" in the economy.