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Tax And Credit Top UK SMEs' Election Agenda

30 April 2010

Rising taxation and a continuing lack of access to credit have been flagged as two major concerns by small businesses as the general election campaign enters its final week.

In a statement released prior to the final televised debate between the leaders of the three main political parties on April 29, the Federation of Small Businesses (FSB) warned that the planned 1% rise in National Insurance Contributions would lead to 57,000 jobs being lost in the small- to medium-sized business sector.

"Business sentiment is finely balanced as the UK continues to recover from the longest and deepest recession since records began," commented John Walker, National Chairman of the FSB. "There are three key issues which must be addressed by the party leaders if we are to carry on the road to recovery and avoid a double-dip recession – tax, employment and access to finance."

"We now look forward to working with a new government, of whatever hue, and look forward to putting the case for growth in the small business sector as the main route to recovery," Walker added.

Small businesses are reluctant to approach banks for credit in the wake of the global banking crisis, according to a survey by the FSB. The survey polled over 1,400 FSB members and the results showed that as few as 18% of businesses have applied for new credit. Only half of those businesses that applied were successful in obtaining credit.

Where businesses had existing credit it seems that 16% had seen the cost of their borrowing increase over the last two months. The increase in borrowing rates ranged from 2% to 3% for nearly half of those surveyed, but at the other end of the spectrum interest rates rose by between 10% and 14% for 12% of businesses questioned.

However, Peter Ibbetson, chairman of RBS bank's small business division, has stated that companies appear to be putting investment plans to one side and are not applying for new finance. He was quoted by as saying that: “At the moment, there are fewer businesses approaching us for loans, and they are on average asking for around a third less money than a couple of years ago. Our approval rate is 85%, the same as it has always been. We’ve emphatically supported business in lots of different ways, but we can’t force them to borrow if they don’t want to.”

TAGS: small business | business | interest | Federation of Small Businesses (FSB) | United Kingdom | small and medium-sized enterprises (SME) | social security

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