Nearly 60% of trade and services companies need to increase their credit structures, and the average increase needed is 30%, according to a survey by the Federation of Israeli Chambers of Commerce. 81% of trade and services companies will need to increase their credit structuring in 2009.
The survey covered 80 trade and services companies, including retailers, wholesalers food, communications, and logistics companies. 68% of the respondents were small and mid-sized businesses and the rest were large companies.
Among the companies that said that they will need more credit in 2009, 36% said it was needed to expand their business, 33% said it was needed for working capital, and 31% said it was because of an expected slowdown in activity.
Among the companies that said that they will need more credit now, 40% said it was needed to finance current expenses, such as inventory and operating expenses; 31% cited current accounts, such as VAT, income tax, arnona (local property tax), and utilities; 26% cited the need to cover payroll; and the rest cited other reasons. The survey said that the need for extra credit was due to forecasts of lower revenue and worsening credit terms by banks and suppliers.
Chambers of Commerce president Uriel Lynn said that main current problem of small and mid-sized businesses was the drop in credit and the effect on cash flow. Available business sector credit totals NIS 741 billion, 51% of which is provided by banks and 36% by financial institutions.
Published by Globes [online], Israel business news - www.globes-online.com - on December 7, 2008
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