Credit squeeze on small businesses tightens

Banks' squeeze on credit for small businesses is tightening while confidence is waning ever further, a new report has found. The latest quarterly survey by the Federation of Small Businesses (FSB) shows that four in 10 small firms had been refused credit, with more companies firing than hiring for the 10th quarter in a row. Confidence has fallen in virtually every sector bar health and motor services, with the most marked decline coming in the property market and financial services, both critical to London's economy. Despite the credit squeeze, more than half of the nearly 3,000 firms surveyed said they planned to grow their businesses over the coming year. One in five said the lack of access to finance was their main obstacle to growth. The FSB chairman, John Walker, said: "We know from past research that many small businesses missed growth opportunities because they couldn't access the money they needed. "This ongoing credit squeeze is becoming critical. Unless this situation is addressed effectively and rapidly, that confidence might evaporate altogether, with dire consequences for the economy." The FSB also urged the chancellor to cancel a planned 3p hike in fuel duty this August, with most businesses citing fuel bills as the major factor in their rising costs.