Britain's smaller companies buckle under pressure

Britain’s SMEs are in need of help after being ravaged by weak demand, lack of funding, and late payment.

Smaller manufacturers struggled this quarter as orders for goods plummeted both home and abroad. Production fell over the same period, as margins are being squeezed.

The FSB may have said that the recession is over but this is further evidence that the plight of SMEs is certainly not – Banks have been increasingly risk averse during the financial crisis and less willing to provide smaller companies with the funding they so desperately need in order to grow.

Average interest rates on small business loans (up to £1M) actually rose in the third quarter from 3.76% to 3.85% after the ‘Funding for Lending’ Scheme was introduced on 1st August. In stark contrast, average interest rates on large business loans (in excess of £20M) fell from 2.48% to 2.34% over the same period.

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