The FPB is concerned at reports that high street banks are beginning to reduce credit facilities and increase overdraft charges.

Following the merger of HBOS and Lloyds TSB, the FPB is warning that less choice between banks could mean that, as the credit crunch continues, the services offered to small firms are diminished. Recent research carried out by Cambridge University shows that, although the number of small firms seeking finance in 2007 increased only slightly from 2004, when the previous survey took place, the level of funding required soared from an average of £82,000 to £470,000. That figure is likely to have increased markedly over the past year.

"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."

Mr Guilford listed the major concerns facing small businesses in the current banking turmoil: reduced borrowing capacity; reduced service capacity as banks cut staff, including bank managers and relationship managers; branch closures; banks reducing their borrowing and calling in loans.