New figures from an index on business distress has shown that one in four small businesses are concerned about their debt levels, with warnings coming that the next financial quarter could see a rise in administrations and insolvencies.
The quarterly Business Distress Index, published by insolvency trade body R3, showed that the proportion of businesses that were worrying about their debts had increase in the most recent quarter compared to the last, with small businesses showing particular vulnerability.
The greatest concerns centred on bank loans and other finance debts for which companies were liable. Some 43 per cent of the businesses surveyed said these were their biggest problems rising sharply from the 24 per cent measured in September 2010.
A spokeswoman for R3 Eileen Maclean, said that the number of small and medium-sized businesses that were struggling to address their financial predicaments was alarming.
“If these distressed businesses continue along this downward trend they may lose control of their mounting debt, which will push them into insolvency in the coming quarter,” she said.
“These businesses are allowing their debts to manifest instead of being able to pay them off; things aren’t improving for these businesses which are of real concern at a time when monetary and fiscal policy should be benefiting businesses.”
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