Insider Media Limited

A Black Country insolvency and corporate rescue expert is urging firms to stop "bashing the banks" and look to keep their own houses in order. John Travers said that firms are now facing “a new economic reality”.

The latest monthly report from the Bank of England reveals that in quarter two of 2010, lending across all the main sectors of the economy was reduced for the fifth consecutive quarter.

The survey is produced in conjunction with all the major lenders and includes Banco Santander, Barclays, HSBC, Lloyds Banking Group, Nationwide and Royal Bank of Scotland.

Figures revealed an £8.6bn drop in overall lending to UK business during Q2, with sectors such as manufacturing and property especially hard hit.

John Travers, of Stourbridge-based John D Travers & Co, says that unlike the years running up to the credit crunch where optimism prevailed and borrowing, in some cases, was made too easy, firms face a new economic reality.

He said: “Funding is still available, but only for those businesses able to present a robust and achievable business plan. In this new world, owners and managers will be forced to take time out to plan ahead and to let go of the idea that the banks will be taking all of any additional risk.

“It is these smaller businesses that need to be most watchful, as not only are they likely to paying higher interest rates on their loans and overdrafts than larger firms, but also busy owner mangers rarely find time to take a strategic overview of their financial health.”