The latest survey from the Federation of Small Businesses shows that SME’s are not doing too well in the current economic climate. The FSB question about three thousand businesses in its quarterly ‘Voice of Small Business’ index. In this latest survey the FSB found that an amazing forty percent of firms are refused credit. Added to this is the fact that firms are continuing to lay off staff.
The refusal of credit is a lot to do with the financial troubles of the Eurozone. It has been a difficult time what with the prospect of Greece leaving the Euro. A lot of banks could go under if this happens and the bank chiefs are really worried even though Greece is now on the verge of forming a coalition government. So it was never going to be the priority of banks to lend money to SMEs which could be a high risk.
It was not, however, all bad news because over fifty percent of the firms surveyed said that they still planned to expand in the next year. John Walker, national chairman of the FSB, said that the government still needed to do more to promote growth amongst SMEs. He said that the government wanted the help of SMEs to get the country out of recession so it was only right that they get the help they need in return.
The Chancellor, George Osborne has just announced a scheme that will ease the problem by giving banks £100 billion in return for the promise that they will lend money more freely to SMEs. It is a good idea but the scheme may be found to struggle in a still risky economic climate.