THEY are living with debt hanging over their heads.

More than one in five businesses in our area is struggling to keep up with crippling debts, according to new figures.

The R3 insolvency trade body has released evidence of what it calls “zombie businesses”, represented by the 21 per cent of firms in the region having to go cap in hand to their creditors to negotiate payments.

The study also reveals that 10,000 of the region's companies are struggling to pay debts in time.

R3 Southern committee chairman James Stares, director of Grant Thornton LLP, said: “With the economy recovering, it’s crunch time for struggling businesses as lenders start to make their minds up about which businesses to continue supporting and those to call time on.

“It won’t be easy as the prolonged period of low interest rates and Government support schemes has made it hard to distinguish between businesses that are struggling but viable and those without a future.”

Committee vice-chairman Mike Pavitt, a partner at Paris Smith LLP, warned that many are in a “perilous position” and added: “While they have yet to enter formal insolvency procedures, directors of such businesses should be planning now against the possibility that the day of reckoning could be close.”