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Lenders keep zombie companies alive

Published 30/08/2011 00:00:00

A recent survey by KPMG found that there are now a fair number of so called "zombie companies"; these are basically companies which just about can afford to pay interest but nothing else. Lenders do not want to push those companies any further because they are worried of making provisions on their book and/or having to review the lending to similar companies. Unsurprisingly the majority of these companies are SMEs!

This is not a helpful approach to those companies who need better support and some better ideas to re-structure their affairs. I also wonder what influence this policy has on the way banks treat their other business clients - it looks like a giveaway to me!

One thing is thus clear - this is another "message" that it will get more difficult to raise finance for a business venture, unless you work with a strong team (unless you have all the time in the world and don't have to focus on running and developing your business!)

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