Firms are seeing their chances of securing lending stifled at a result of bank mergers and recapitalisation, the Federation of Small Business (FSB) has warned.
Two years on from the beginning of the banking crisis that has rocked the UK economy, the FSB has said that changes in the banking sector mean that business owners have seen the number of credit avenues dry up significantly.
As a result, many have nowhere to turn if their application for lending is turned down by the major banks and building societies on the high street.
It is estimated that a quarter of small firms is still struggling to secure affordable finance, despite bank bail-outs and a record low base rate of interest.
Consequently, the FSB is proposing a raft of new measures to ensure that small businesses have a fair chance of securing affordable credit.
They include: restructuring Regional Development Agencies to offer loans; turning the Post Office into the Post Bank that would operate either as a state owned bank or as a mutual or trustee bank; and actively promote financial intermediaries, recently created by the Government, to viable small businesses unable to access finance.
Of the changes, FSB national chairman, John Wright, commented: "This would increase the choice of finance on offer to business owners, therefore enhancing the prospect of survival and helping them play their part in stimulating the economy and getting the UK out of recession and onto a steady recovery."
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