Funeral Directors will be ok, but many other businesses destined for life-support

An interesting angle on the impending cash flow crisis that is about to engulf much of corporate Britain. Lloyds TSB believe that 10% of its corporate banking customers (i.e. those with bank loans or bank overdrafts) will be on special watch during 2009, as the number of insolvencies is expected to rise rapidly…

Thus far the focus of the media on the fall-out of the credit crunch has focused on the banking industry and other segments of the financial services sector. However, the real liquidity crisis is just about to hit us. Businesses that rely on bank financing to stay afloat are caught in a perfect storm - declining consumer/business demand + tightening credit terms. Many businesses will not survive this winter - including lots of well-known names. Businesses that have been financed by venture capital and bank deals in “leveraged” deals (i.e. lots of debt) are particularly vulnerable.

The Guardian reports how Lloyds TSB, a major provider of corporate banking, is expecting to put a high proportion of its corporate customers on special watch - a form of life support machine. Many of the patients won’t pull through. Although Funeral Directors can expect to continue to enjoy a steady, predictable demand - making them perhaps the most recession proof industry out there…