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Federation of Small Businesses in plea to UK banks

The Federation of Small Businesses (FSB) has today called upon UK banks to "return to their normal lending criteria and start playing their role as lenders with a large dose of modesty". This is the New Year message coming out of the business arena in the UK with UK banks still unwilling, and in some cases unable, to return to the lending criteria which was in place before the credit crunch.

There is no doubt, and there is statistical evidence to prove so, that perfectly healthy businesses are struggling to survive purely and simply because of the need for short-term liquidity. Many supplies are "pulling in their horns" and demanding more collateral and shorter payment terms, which is then having a knock-on effect to many businesses in the UK. The answer to the problem is simple, a significant increase in short-term liquidity in the business arena would allow many businesses to get back in shape and refocused for the future.

However, many banks in the UK have been burnt in the recent past and are keen to ensure that the same mistakes are not made again. Whether banks have now gone overcautious is open to debate, but there is no doubt that more liquidity is needed not only in the business arena but also in the personal finance arena.

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