FSB urge banks to lend to small businesses

A third of small businesses are still struggling to attain affordable credit from banks, despite commitments to lend fairly, according to new figures from the Federation of Small Businesses (FSB).

The poll of over 5,000 FSB members indicates that 30 per cent of small businesses have experienced an increase in the cost of new or existing finance in the last two months.

The figures reveal a worrying economic situation for small businesses: over 60 per cent had experienced a decrease in trade in the last two months, and forty per cent are being paid later for services and supplies. This has led to 35 per cent considering staff cutbacks, 36 per cent considering reducing staff hours, 41 per cent contemplating curbing future hiring and 39 per cent even thinking about closing down.

FSB National Chairman John Wright said:

“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.

“These figures show that with nowhere to turn, small businesses are having to consider cutting jobs and maybe even closing down. This would be a disaster for millions of employees as well as the economy as a whole.

“The FSB will be urging the Government and the banks at today’s meeting to be more proactive and amenable in their lending practices. With interest rates down, it is more important than ever that the Government’s Small Business Finance Scheme is put in place. The onus will now be on the banks and their branch managers to stop their Scrooge-like tactics and open their pockets to small businesses.”

Related article:
Banks urged to accept  £4m for small business lending

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