Factoring | Invoice Discounting

Banks are Barriers for Small Businesses

Date Added: Fri November 14 2008

Banks are among the biggest blocks to the growth of small businesses, according to the FSB.

The FSB analysis of around 8,700 members, called “Putting the Economy Back on Track: Business Support and Finance”, named banks as one of the biggest barriers to their growth because of difficulties accessing credit.

The findings revealed that small businesses thrive on personal relationships for advice in areas such as starting up; recruitment; marketing and product development, compared with the last member survey in 2006. The number of members who consulted their customers leapt from 15 percent to 80 percent this year. Around three quarters said they relied on informal sources of support, such as other businesses, personal advisors, suppliers and family, compared with around 17 percent last year.

Meanwhile, the statistics showed that those who have used banks as a source of advice have been dissatisfied with the service and described access to finance as a significant barrier to their growth.

Dr Gary Packham, an author of the report and Head of Enterprise at the University of Glamorgan, where the report was compiled, said: “These findings illustrate that action must be taken immediately for small businesses to gain access to vital funds to ensure their growth and survival. People often do not realise that small businesses are the backbone of the economy, employing 13.5 million people and contributing over 50 percent to UK turnover, therefore it is vital that this sector is given the necessary support and backed up by fair and flexible credit.”

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