THE number of struggling businesses in Bournemouth has increased for the third quarter in a row.

The latest Begbies Traynor Red Flag Alert research shows the number of businesses reporting “significant” financial distress was up 37 per cent on the same quarter last year – from 616 to 845.

Between the first and second quarters, there was a 12 per cent rise – from 754 to 845. The figures were broadly in line with the national picture.

Meanwhile, the number of businesses in “critical” distress in the town rose 71 per cent year-on-year and 50 per cent between the first and second quarters of 2014.

And Begbies Traynor found the distress figures were driven by smaller firms, with SMEs making up 95 per cent of south west businesses in difficulty.

Julie Palmer, regional managing partner at Begbies Traynor in the South West, said: “Despite rising distress levels, we’re finding the SMEs around Bournemouth and the South West are more optimistic than ever about their outlook and as such they are expected to fuel job creation over the coming year.

“While this is a positive sign that SMEs are preparing for growth, without funding and careful financial planning this will only increase their business’s cost base, one of the principal causes of severe ‘critical’ distress within the SME community.

“Access to funding is still a major issue for a huge number of SMEs. Although traditional bank finance is now widely available for those firms fortunate enough to comply with mainstream lending criteria, it remains a different story for businesses in complex or challenged circumstances. Our latest Red Flag findings once again underline the critical importance for current government initiatives to increase the diversity of funding providers and to better signpost alternative business finance.”

Begbies Traynor estimates that an interest rise of as little as one per cent could have severe consequences for a large number of the approximately 218,000 SMEs across the UK already in ‘significant’ distress.

The construction sector fared well in the south west, reporting a 15 per cent quarterly drop in businesses in ‘critical’ distress. Manufacturing also performed well, with a 60 per cent quarterly decline in the same figure. General retailing suffered worst, reporting a 56 per cent rise.