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The recent credit crunch could make it more difficult for some small business start-ups to access finances and could hinder new company formation, according to a recent survey.
According to small business support service Eastside Consulting, the tightening of credit stipulations could mean that "less people will be in a position to take the entrepreneurial risk".
Banks and private equity firms may continue the existing trend of favouring "risk-averse businesses" which will leave company directors of riskier start-ups in a difficult position.
The Bank of England warned in its Financial Stability Report, released on October 24th, that following the credit squeeze on global markets, "banks are likely to make some changes to their business models" and that "the financial system in the United Kingdom and elsewhere is vulnerable to further shocks".
Richard Litchfield, managing director of Eastside Consulting, said: "I think that what were going to find is that the impact of the credit crunch is going to play out over a slightly longer time frame.
"It will probably will be more difficult for startups, and especially for those entrepreneurs that dont have personal security or guarantee available."
Mr Litchfield also added that there might well be some kind of "slowing in the growth of enterprise", although this is not expected to affect the private finance market
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