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Companies not afraid of Loans

Deloittes released a report on a survey of UK companies that looked at their confidence and expectation of borrowing for the year ahead. Less than 50% of the participants had borrowed more in the past year than previously, yet 54% expected to borrow more in the year ahead.

Many companies questioned preferred to raise cash in the form of loans rather than using equity, even though the UK stock market has been performing strongly recently.

However this demand for more borrowing is likely to meet difficulties as banks expect their ability to lend to companies to be reduced and interest rates are likely to be more expensive, although this was already expected by the companies involved.

The report concludes with the big question of whether this continued appetite for commercial loans and increased borrowing can be satisfied in the wake of the global credit disturbances experienced last month and still continuing.

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