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Banks cut credit to one in three small firms

London, UK (25/03/2009)

LONDON (Daily Mail) A third of small firms are struggling to access credit, a report said yesterday.

The research showed banks are reducing commercial overdraft facilities and seeking more security for loans. Nearly one in five firms said they were being hit by higher charges, according to the Federation of Small Businesses.
 
Two in five businesses will have to cut staff numbers or hours to survive.
 
In its survey of 6,000 members, two in five admitted to cutting staff numbers or hours in the battle to survive.
 
A majority said their bank was less helpful now than it had been before the recession began.
 
Alistair Anderson, the federation's-spokesman, said: 'These figures demonstrate how times are really tough for small firms and how access to finance continues to be a real challenge.

'The majority (are) indicating that the banks are failing to be more helpful - precisely at a time when small businesses most need their support.'
 
Another lobby group, the Forum of Private Business, said the Government must focus on boosting business confidence and lifting the economy out of recession.

In its survey, nearly two thirds of members called on ministers to prioritise support for businesses in the upcoming Budget.
Forum spokesman Phil Orford said: 'Most business owners are receiving confusing messages from the Government and the banks.'

With business casualties reaching 86 a day, the Daily Mail's Fair Deal for Small Firms campaign has highlighted the plight of what is seen as the 'lifeblood' of Britain's economy.

Firms have been struggling to access loan schemes such as the Enterprise Finance Guarantee.

A report by the British Chambers of Commerce revealed just one firm in 250 had secured a loan under the £1.3billion initiative.


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