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The Credit Crunch and Small Business Start-up Bank Accounts


The much talked about credit crunch has begun affecting the availability of bank accounts for small business start-ups. The mood both among banks and their government backed regulators is one of extreme caution towards new business bank account applications.

In recent years, the spate of new small business start-ups was matched only by the equal rise in bank accounts being opened for them by high street and internet based financial institutions eager to increase or maintain their share of this lucrative market.

The current credit crunch position has by no means reached absurd proportions by any level of reasonable measurement, but what we are finding is that banks are assessing account applications based on new and far more stringent criteria.

What was once the purview of lending applications, where bad credit histories, adverse county court judgements and so on would disallow loan requests from small businesses; those same factors are now foremost in the decision of whether or not to grant of credit balance bank account.

The effect for small businesses and the people wishing to start-up has provided a hard look at the realities of run away credit cards which the banks themselves were accomplices.

Today, very few reasonable respecting businesses who ask to be paid in cash can expect to gain much trade except if their activities are centred on local window cleaning services.

Whilst most UK residents could still obtain bank accounts for a business start-up, the increased percentage of persons who would be refused could significantly affect the number of businesses which are launched in the near future.

The opportunities for these people appear grim and short of asking a family member or friend to put an acceptable face on their business, it is difficult to envisage in the short term a means for them to start a small business.

All this at a time when a recession is looming and business start-up may be one of a few avenues available to some for avoiding unemployment.

At times such as these, it is for the governments to step in and engage the problem, not only with the bank’s current lending criteria, but also to help avoid some of the mistakes made by the financial institutions which has resulted in the current climate.

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