Small firms still battling the banks
Dec 09 2008
A third of small businesses are still struggling to get bank finance and a similar number have seen a rise in the cost of their loans over the last two months, according to new research.
Findings from the Federation for Small Businesses (FSB) show a third of firms report they are finding it hard to secure affordable credit, despite pledges from the banks.
In addition, the survey of the organisation's 5,000 members finds 60 per cent have noticed a drop in trade and 40 per cent are experiencing late payment from customers.
John Wright, national chairman of the FSB, says: 'With trade down and invoices increasingly being paid late, small businesses are having to turn to their banks for credit to tide them over. But, despite the government's £500 billion bailout, the banks still do not seem to be lending to small businesses.'
The survey shows businesses' problems are having an effect on recruitment, as over a third of companies are considering cutting staff hours and 40 per cent are thinking about limiting future hiring.
Chancellor Alistair Darling and business secretary Lord Peter Mandelson are encouraging banks to lend more money to small businesses to demonstrate to taxpayers that they are getting something in return for the public investment in the financial organisations.
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