Four in 10 small businesses 'considering closure' due to credit woes

Almost 40% of small businesses are thinking about closing down as they continue to struggle to get credit from the banks, according to the Federation of Small Businesses (FSB).

Polling 5,000 of its members, the group found that 35% of businesses are considering cutting back on staff and 36% are thinking of reducing staff working hours.

Some 39% said they were contemplating shutting down altogether.

The survey comes ahead of today's Lord Mandelson-chaired Small Business Finance Forum, which was set up to monitor the banks' lending to small businesses.

National chairman John Wright said banks were still not lending, despite the £500 billion Government bailout.

"These figures show that with nowhere to turn, small businesses are having to consider cutting jobs and maybe even closing down," he added.

"The onus will now be on the banks and their branch managers to stop their Scrooge-like tactics and open their pockets to small businesses."

Meanwhile HSBC has become the first to break ranks and offer a $5 billion special 'small business fund' to increase liquidity to SMEs worldwide.

Of this, £1 million has been earmarked for the UK.

IMAGE Frantzesco Kangaris/PA Wire