Warning to UK SMEs over CIT Group failure |
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| Finance | |
| Written by Roberta Murray | |
| Thursday, 05 November 2009 | |
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CIT Group bankruptcy could leave UK SMEs struggling to secure finance for vital investments. The failure of CIT Group (NYSE:CIT) could have more of an impact on SME financing in the UK than had originally been anticipated. CIT Group, America’s leading specialist lender to SMEs , filed for Chapter 11 late on Sunday night in the fifth biggest bankruptcy in US history.The bankruptcy of US lender CIT could leave UK SMEs struggling to secure finance for vital investment in IT and machinery, warns Syscap, a leading independent finance provider. CIT Group is actually one of the UK’s largest providers of vendor finance which enables companies to fund investments in IT, telecoms and plant and machinery. CIT completed the acquisition of Barclays Bank’s UK and German Vendor Financing arm in January 2007. At the time of the acquisition Barclays Bank Vendor Financing had assets of £1.1billion. Comments Philip White, Chief Executive, of Syscap: “Although CIT is not the biggest household name in finance it played a very important role in funding UK SMEs through its vendor programmes.” “For many SMEs being unable to finance the replacement of redundant IT or machinery will leave them unable to operate properly.” “With mainstream institutional lenders still resisting Government efforts to increase lending to SMEs the shrinkage of CIT is going to increases problems for SMEs trying to access funding.” Syscap says that although it has had success in attracting new bank funding into vendor financing over the last few months it is inevitable that the bankruptcy of CIT will leave a void. Says White: “We are receiving an increasing number of approaches from companies that had established vendor finance programmes and need an alternative partner to support their sales effort. Without vendor financing their ability to sell their solutions is diminished and the ability of SMEs to make investments in their business is weakened.”
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