New charges and high interest rates hit small businesses

Date: 16th September 2009

Despite recent increases to the availability of credit, Britain's small businesses are still struggling to cope with a raft of new charges introduced by cautious lenders.

That is according to the Forum of Private Businesses (FPB), which has found that 63 per cent of its members feel that the cost of obtaining finance remains a major issue for them.

Furthermore, one in five of those members polled admitted that this has now grown to be a "very serious" concern, with the growth in the availability of lending offset by the emergence of a range of new economic challenges.

Phil McCabe from the FPB explained: "Steep interest rates, a range of charges and demands for additional security are combining to create a significant cost barrier preventing viable yet struggling firms from securing the funding they need."

This warning comes just days after the chancellor Alistair Darling revealed plans to broaden the range of finance options available to small businesses across the UK.

Writing in the Observer, he pledged to ensure that smaller enterprises will no longer be reliant on the major high street banks for their finance.