A survey conducted by the Forum of Private Business recently amongst 6, 900 small businesses has revealed the harsh reality of life for those organisations in need of finance in these "credit crunch" days.29% of respondents said there had been a deterioration in access to overdfaft facilities in the last quarter, with 5% saying that overdraft facilities had been withdrawn completely from them. 35% of respondents reported a deterioration in access to other loans with 12% saying there was no longer any access to loans.
During the period October to December 2008, interests rates dropped from 5% to 2%, but the FPB survey showed that the cost of loans to small businesses had risen by 1.4%, while overdrafts now cost 1.5% more.
Mandelson's loan guarantee scheme can't come quickly enough for many small businesses. I sincerely hope that banks don't delay providing credit facilities until the new scheme is introduced (since under the new scheme, their exposure is reduced) That would certainly be counter productive at a time when some businesses are literally being starved of cash. It looks like Banks are still being seen as the real bad guys in this recession. When they start to get some better press, it won't be just Baroness Vadera talking about green shoots perhaps!