The latest figures from the British Bankers’ Association (BBA) show that deposits by small businesses into the UK’s banks have eroded substantially. The Forum of Private Business (FPB) is concerned that, although overall lending to small firms has increased marginally, the fall in deposits shows businesses are increasingly struggling to survive the recession.
In January 2009, total bank lending to small firms increased by £235 million to £54.2 billion. However, compared to the previous month, deposits dropped by £1.5 billion to £52.7 billion, according to the BBA.
"While there are seasonal variations in lending, and although deposits do decrease in January in line with tax payments, in one month they fell by almost double the amount in the first quarter of 2008," said the FPB’s Chief Executive, Phil Orford. "In the past four months to January, deposits fell by £2.3 billion. In the same period, net lending has increased by a mere £76 million. This disparity shows the urgent need for real liquidity measures. At present, many small businesses are having to find this vital cash flow with little, if any, support from the banks."
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British Bankers Association
Forum of Private Business