Quarter of small and medium firms in North eyeing expansion

A quarter of small and medium sized businesses in the North expect to expand during 2009 despite the recession, it was revealed today.

Amid forecasts of financial meltdown in the SME sector, not one company questioned for the independently conducted Small Business Finance Barometer thought they would have to close down.

Almost half of SMEs quizzed – 46% – predicted their business would stay the same size through 2009.

With redundancy announcements on an almost daily basis, eight in ten North SMEs said they expected to keep the same number of permanent staff.

However less than 10% said they would recruit new permanent employees during 2009.

Harry Parkinson, managing director of Close Invoice Finance in Ireland said: “There is no doubt that these are some of the most challenging financial conditions of recent times and every day there are further gloomy predictions about the health of small and medium sized businesses.

“However, as our survey shows, this sector is incredibly resilient and, even as the UK enters a recession, one in four SMEs in Northern Ireland still expects to expand this year. That is quite encouraging.”

The North figure of 25% for those expecting to expand is somewhat better than the UK average – which stands at 20%.

Mr Parkinson said while he applauded the government’s proposals to reignite lending to small businesses, it remained to be seen how quickly they would provide any relief.

“We need to help SMEs use all the tools at their disposal to secure funding that will enable them to weather this current economic storm.”

Unsurprisingly to Close Invoice Finance, nearly half of respondents to their survey in the North cited market volatility as their main business concern this year, with a further 27% saying they were worried about cashflow.

“SMEs are still experiencing huge difficulties when it comes to increasing overdrafts and loans as banks continue to keep a tight rein on lending. That’s where invoice finance comes in,” he said.

Mr Parkinson explained: “Essentially, invoice finance works when a company sells its unpaid invoices and in return receives immediate payment of up to 95% of the worth of those unpaid bills.

“Businesses have instant access to cashflow and, if necessary we chase the payment of the debt leaving them to get on with the running of their business.”