Demand for small business credit still at critically high levels

Small businesses with large amounts of orders are still being turned down for credit, according to a recent report by the Forum of Private Business (FPB).

The FPB believe that local banks should be able to treat letters of credit and strong order books as a sign that small businesses are financially viable to lend to.

Many business groups throughout the UK are concerned that unless the flow of credit improves in the near future, a large number of small businesses may be forced to close. The FPB have argued that since the Government are looking to the private sector to help jump-start the UK's economy this could severely jeapordise the country's financial recovery.

Nick Palin, the FPB's Finance Director, commented that small business owners require "even more cost-effective lending in recovery than during a recession.

"This is clearly not happening and there is a serious risk to businesses and the wider economy as a result."

He went on to add that there is a need for greater discretion to help empower regional bank managers to make decisions based upon their specialist knowledge of local small businesses.

04/10/10