FSB: Credit crunch biting small businesses

Latest FSB survey results show decrease in trade and increase in costs for small businesses.

The Federation of Small Businesses (FSB) has sent results to the Bank of England of a snap poll demonstrating the devastating impact of the credit crunch, and is calling on its Monetary Policy Committee to cut interest rates this Thursday.

Figures released today from the FSB poll reveal that a majority of small businesses have seen their operating costs increase and trade reduced in the last year while most would back a reduction in interest rates by the Bank.

Over 80 per cent of respondents said their costs had increased in the last year and 46 per cent had seen a decrease in trade.

When asked about increases in the cost of finance such as loans and overdrafts, 40 per cent said they had seen increases in such facilities from the clearing banks.

A worrying 51 per cent had seen an increase in their payment times from invoicing to full payment and this reflects the FSB’s concern that large companies are improving their cash flow on the back of their smaller suppliers.

FSB National Chairman John Wright said:

“These startling figures show that the credit crunch is trickling through to the small business sector. In these tough times it is proving increasingly harder for small businesses to rely on their savings and that is why it is so important for banks to be more willing to lend money and for larger firms to settle invoices on time.

“Small business survival is integral to the wellbeing of the British economy. That is why a cut in interest rates by the Bank of England is crucial. The Bank must set aside worries about inflation and look to giving the economy a vital boost.”

ENDS

1. The FSB is Britain’s leading business organisation with over 215,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk.

2. The FSB snap poll was undertaken online in the last two weeks of September 2008. Within a 14 day period over 6000 small businesses had responded.

3. For the full survey results contact marc.shoffman@fsb.org.uk

Contacts:

Stephen Alambritis: 020 7592 8112 / 07788 422155
Sophie Kummer: 020 7592 8128/07917628998
Prue Watson 020 7592 8121 / 07825 125695
Marc Shoffman 020 7592 8113 / 07595 067068

For regional FSB contacts please go to www.fsb.org.uk/regions