After months of talk and speculation finally a US bank has filed for Chapter 11 bankruptcy, the equivalent of administration in the UK.

But will the demise of Lehman Brothers impact upon SME’s?

I think that the answer to this is YES. Whilst most SME’s will avoid the financial turbulence that the fall of Lehman will undoubtedly cause across the worlds financial markets it is likely to be the banks responses at the commercial and retail end that impact upon SME’s the most.

We have seen in recent months that banks and other commercial finance lenders have tightened their belts with respect to lending and I think that we are going to see a continuation of this trend and a back to basics approach with lending decisions based not so much on “voodoo science” but on a more commercial basis.

At the moment it would appear that there are banks out there with funds available enabling them to look at deals but that business owners are going to have to ensure that proposals are based on fact not fiction, are realistic and commercially sound, that there is a good business plan behind the business, that they have good reliable financial information and forecasts and that the business can afford to repay the loans.

I also think that banks will be looking for security and that it will become much more difficult to arrange deals on an unsecured basis.

Time will tell how the fall of Lehman will impact on SME’s and the wider economy. I think that the next few days will be interesting.