smallbusiness.co.uk: Helping your business think big

SMEs that have borrowed start-up money from specialist lenders may face a struggle in making repayments.

Difficulty in the money market, principally relating to the London interbank rates - which determines the rate at which banks lend to each other, has caused the cost of lending to rise.

The increases will be passed on to the consumers, which will mean an increase in loan repayments, making it more expensive for small firms to borrow money, the Telegraph reports.

Commenting on the loan costs, Philip George at Commercial First, a specialist commercial mortgage lender, tells the publication: 'Small business will see an overall increase in the cost of borrowing.'

He adds: 'No one is trying to profiteer from what is happening in the money markets, but the fact is that the cost of funding has gone up and that will be passed on to small companies.'

The Federation of Small Businesses is worried about the effect the rises may have on its firms, especially with many of them still reeling from this summer's flooding.

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