Banks biggest 'barrier' to small business growth

Date: 7th November 2008

Banks are the biggest barrier to small enterprise growth, according to an investigation by the Federation of Small Businesses (FSB).

A study by the FSB has revealed that while banks are vital to getting financial support, they are also one of the biggest stumbling blocks due to difficulties in accessing credit.

The survey, which involved 8,700 small firms, found that 80 per cent of business start-ups consult their customers for advice in areas such as recruitment, marketing and product development.

Chairman of policy for the FSB, John Walker, said: "There is evidence that new and growing firms, which require finance from their banks, are experiencing barriers … and therefore not getting the same sort of close contact with their banks."

He added that the first step in helping the sector would be to immediately pass on the base rate reduction, which could save business start-ups in the range of £750 million and help get the economy back on track.

The FSB has over 215,000 members and exists to protect the interests of business start-ups.