SMEs 'still suffering' from reduced bank lending

Small retailers are still suffering from contracted lending, the British Retail Consortium (BRC) has said.

The BRC's Credit Conditions Survey found that 33% of small retailers have experienced a reduction in bank lending over the past three months. Some 44% also said that the cost of credit had increased within the period.

Of the respondents who reported limited access to credit, almost two-thirds (66%) said that it had undermined their ability to trade, and 60% that they have had to reduce staff levels.

Trade credit insurance - which helps to protect suppliers from customers who fail to pay - also continued to be a concern for small retailers, with 11% of those surveyed saying that the reduction or withdrawal of such cover had affected their business over the last three months.

The BRC is now calling for the Government's credit insurance top-up scheme to be back-dated to April 2008, which is the point at which it claims insurers began removing cover.

Last month the Government extended and backdated its top-up scheme to firms that have seen their trade credit insurance reduced since 1 October 2008.

Jane Milne, BRC business environment director, said: "For retailers to survive the current tough trading conditions and keep staff in work they need have to have the right stock on their shelves. This is especially important in the run up to Christmas – the most important trading period for most retailers.

"Extending the trade credit insurance top-scheme will help, but we're calling on the Government to extend the scheme to last April – when the recession started to bite."