Small businesses 'need good lending strategy'

Owners of small businesses have been advised to take care when approaching a bank for financial help.

According to Business Link, small companies should first seek advice from an external source with knowledge of the business, as well dealing with a representative of the bank directly when they come to make their application.

Senior business adviser at the service Andy Berrow said that the majority of banks view small businesses as a "mass market" and therefore often base their lending decisions on "credit scoring and trend analysis techniques".

He advised: "Talking to the bank is always a good strategy rather than just completing the application form and returning it to them."

Mr Berrow's comments about the importance of strategy in financial affairs could also apply to the way in which small businesses handle their accounts.

The British Retail Consortium recently predicted that 2008 could be a difficult year for small UK firms, particularly those operating in the retail sector.