Wednesday, November 12, 2008

Contractors face ruin as banks refuse loans

Bankers are coming under a barrage of criticism from contractors as credit lines for construction companies dry up.

Furious civil engineering firms and subcontractors are warning of jobs carnage unless the Government forces banks to act responsibly over refinancing credit and providing loans.

Bankers are being accused of using any excuse to pull credit from contractors despite Government pressure to free up cash in the system.

Patrick Waldron, chairman of the Civil Engineering Contractors Association's North West branch, said: "Banks are scrutinising their existing agreements with contractors and where they have even the slightest concern they are not renewing terms.

"Developer-contractors are finding it harder to finance schemes, with banks asking for personal guarantees".


Contractors face ruin as banks refuse loans


He warned: "They are passing on the consequences and the SMEs are getting squeezed. But if the SMEs are allowed to fail then the whole industry fails."

Latest insolvency figures show the funding crisis for smaller contractors is starting to bite with construction failures up two thirds between July and September compared with the same period a year ago.

Rosemary Beales, director of CECA, called on the Government to act before thousands more jobs are lost.

She said: "With credit facilities being squeezed by banks, the inevitable result will be redundancies and small contracting firms going under.

"We want to see the Government make sure the banks are lending at 2007 levels again in return for the ВЈ37bn taxpayer bailout."

She warned: "The cost of doing nothing may well be the loss of some of the most enterprising small firms in the country and therefore the employment and skills supported by the SME market.

"The SME sector plays a vital role in construction - we will need them when the economy begins to grow again or the cost to the taxpayer of delivering vital infrastructure will be far greater."

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