Credit crunch hits Connecticut firms

Tighter lending criteria at banks have led to cash flow problems for many small and medium-sized businesses in Connecticut, according to reports.

Nearly 3,000 firms closed their doors during the second quarter of the year, data released by Secretary of the State Susan Bysiewicz and reported in the New Britain Herald reveals.

This figure represents the largest number of first or second-quarter company closures in the past eight years.

Don Klepper-Smith, chief economist and director of research for DataCore Partners, told the publication that "it's not too surprising" businesses would be encountering a challenging cash flow situation.

"The credit crunch is taking on greater definition, meaning a more risk-averse credit environment. Banks and other financial institutions are increasingly cautious about lending," he remarked.

Mr Klepper-Smith said that Connecticut's current conditions are mirrored in several states nationwide.

In June, a Connecticut Business and Industry Association survey showed that fewer than one in four businesses (23 percent) believed credit conditions were either good or excellent.