CBI Access to Finance survey - January 2009


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Without urgent intervention from the Government, the credit crunch hitting UK companies will get even worse over the next three months, according to new CBI research.

Figures from the first monthly CBI Access to finance survey (January 2009) reveal that 63% of firms who sought new finance said its availability had worsened in the last three months.

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  • CBI Access to Finance survey - January 2009

    1. 1. CBI Access to Finance Survey January 2009
    2. 2. Survey details <ul><li>Conducted online 14 th - 22 nd January 2009 </li></ul><ul><li>131 respondents of all business sizes </li></ul><ul><li>In the three months prior to the survey </li></ul><ul><ul><li>LIBOR fell by 395 basis points </li></ul></ul><ul><ul><li>Bank Rate fell by 300 basis points . </li></ul></ul><ul><li> </li></ul>Interest rates
    3. 3. Summary of survey results <ul><li>Availability of corporate credit getting worse </li></ul><ul><li>Further deterioration in past three months </li></ul><ul><li>Conditions expected to worsen in next quarter </li></ul><ul><li>Difficulties greatest for corporate paper and bank loans </li></ul><ul><li>Trade credit insurance more difficult to access </li></ul><ul><li>Sharp increase in cost of new credit </li></ul><ul><li>Cost increase in new credit greater than that for existing credit </li></ul><ul><li>Shift to LIBOR linked lending for new credit </li></ul><ul><li>Greatest cost increase to arrangement fees </li></ul><ul><li>Direct impact on investment and employment </li></ul><ul><li>Biggest impact on capital investment, M&A and staff numbers </li></ul><ul><li>Large firm activity most affected </li></ul>
    4. 4. Q2 – Availability of finance past three months <ul><li>Three in ten businesses have had existing credit lines reduced or removed. </li></ul><ul><li>Of those that sought new and renewed credit lines, 63% said its availability had deteriorated. </li></ul>How has the availability of finance for your business changed over the past 3 months? -----Total sample Existing credit lines New/renewed credit lines
    5. 5. Q3 – Availability of finance next three months <ul><li>28% of all firms expect existing finance availability to tighten further. </li></ul><ul><li>Three fifths expect availability of new and renewed credit to decline. </li></ul>Looking forward, how do you expect the availability of finance for your business to change over the next three months? New/renewed credit lines: past/next three months New/renewed credit lines (where sought % balance) SMEs Large Very Large Overall past 3 months -65 -55 -82 -62 next 3 months -58 -56 -60 -58
    6. 6. Q7 – Where the change in availability occurred <ul><li>Greatest tightening in ability to place corporate paper, though applicable to only 31% of respondents. </li></ul><ul><li>Bank loans applicable to 81% of sample, of which 49% said there was a fall in loan availability. </li></ul>Which methods of financing your business have seen a change in availability over the past three months? Corporate paper Bank loans Invoices/ Payment terms Overdrafts Factoring & Invoice discounting
    7. 7. Q11 – Availability of trade credit insurance <ul><li>Only two fifths of firms used trade credit insurance but of those that did, 65% experienced deterioration in its availability. </li></ul><ul><li>For seven in ten users, the credit limit insured deteriorated. </li></ul>How has the availability of trade credit insurance for the supply of goods and services to your customers changed over the past three months?
    8. 8. Q5 – Cost of finance past three months <ul><li>Half of firms experienced no change in the cost of existing finance. </li></ul><ul><li>Seven in ten firms saw an increase in cost of new finance. </li></ul><ul><li>Nearly all very large firms that sought new finance experienced a cost increase, 35% by more than 100 basis points. </li></ul>By how much has the cost of finance changed over the past three months? Existing credit lines
    9. 9. Q4 – How the cost of finance is calculated <ul><li>Clear shift to LIBOR-linked lending for new credit lines </li></ul><ul><li>Shift most dramatic for SMEs </li></ul>How is the cost of finance for your business calculated?
    10. 10. Q8 – How the cost/availability has changed <ul><li>Arrangement fees were cited by the largest proportion of firms. </li></ul><ul><li>Credit taken much longer to arrange and the burden of doing much greater. </li></ul><ul><li>Overall cost of finance has also significantly increased. </li></ul>In which ways has the cost/availability of finance changed over the past three months?
    11. 11. Q13 Impact to activity of current financing conditions <ul><li>Biggest change is to capital investment activity </li></ul><ul><li>Impact on business activity most significant for large businesses </li></ul>What changes in your UK business activity can be attributed directly to current financing conditions?
    12. 12. CBI Access to Finance Survey January 2009 Embargoed until 00:01 Monday 9 th February