Banking turmoil ‘could harm small businesses’, warns lobby group

A business pressure group has expressed concerns over reports that high street banks are beginning to cut credit facilities and impose higher overdraft charges.

The Forum of Private Business (FPB) has warned that smaller businesses may suffer as banks reduce their borrowing capacity and slash staffing levels in an attempt to rein in their finances during the credit crunch.

‘It appears that, just as the funding requirements of small businesses are increasing because of the economic downturn, banks are cutting back on both the level of facilities they provide and the services they offer,’ said the FPB’s Chairman, Noel Guilford.

‘Accessing finance in order to maintain a healthy cash flow is always a key issue for small firms – now it has become a matter necessary for survival as much as growth.’

The warning comes in the wake of a series of high-profile mergers, takeovers and redundancies in the banking industry.

Mr Guildford is now calling on the financial sector to recognise the continuing needs of small firms, particularly in view of the current economic turmoil.

He added: ‘The FPB is urging banks to recognise the difficulties small businesses are facing, and firms to take steps to protect themselves, such as seeking alternatives to traditional funding streams.’

If you are concerned about financing your firm during the credit crunch, please contact us.