The Federation of Small Businesses, after hearing that the Government is set to provide a £1.3 billion fund for small businesses, has announced that bank managers make good on the fund and supply the necessary money to the businesses that need it the most.

The Federation has declared that they welcome the fund, which is part of a new plan by the Government to guarantee £20 billion worth of loans for businesses.  The FSB announced that the banks in the country no longer had an escape route and it was necessary for them to aid the ailing businesses.

The Federation’s National Chairman, John Wright, said, “We are pleased to finally see the introduction of this fund which mirrors the Small Business Survival scheme that we urged the Government to introduce before the Pre-Budget Report in November. It is sad to see that since we proposed our package in October, small business closures have risen to around 85 a day, meaning over 6,000 have closed while waiting for this fund.

“The onus is now on bank branch managers to actively promote this money to its small business customers to ensure their survival and the revival of the economy. The banks now have no excuses and we will be encouraging our members to apply for these funds while keeping a beady eye on the banks through our Bank Watch Scheme to ensure that they are lending actively and fairly.”

Meanwhile the head of policy for the FSB, Andrew Cave, has agreed with Wright, announcing that the move by the Government was “very welcome”.  However, Cave reminded the Government that the FSB had proposed a similar scheme months ago and since then 6,000 businesses were forced to close down.

In attendance with the Treasury Select Committee, Cave professed his reservations with the scheme, worrying that the money would have difficulty finding its way to those in need of it, saying, “Small businesses are scared to go and talk to their bank manager at the moment, but equally bank managers are scared of the risk of making a bad decision.  Hopefully the announcement made today will bring back a bit of confidence.”

Cave then went on to explain how the FSB were planning to attempt to keep some eyes on the matter as they are going to monitor banks around the country to make sure that the funding reaches the small businesses.

The FSB has also shown how 23 per cent of entrepreneurs support their businesses using a company credit card and a further 26 per cent use their own personal credit cards, leading to a call to cap interest rates on credit cards.

Wright said, “With interest rates at 1.5% and falling, the Chancellor and the Governor of the Bank of England must look into capping interest rates charged on credit cards.  A cap on interest rates would not only reduce business costs but give consumers a real boost and cut the cost of borrowing.”

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