Small firms seek Gordon Brown's help

Small business organisation the Forum of Private Business (FPB) has called on the government to force blue-chip companies to pay their smaller suppliers promptly.

Phil Orford, chief executive of the FPB, met the prime minister, Gordon Brown, yesterday for breakfast to highlight the struggles faced by small businesses in the downturn, ahead of the pre-Budget report on 24 November.

The meeting coincided with the presentation of an FPB petition at 10 Downing Street, urging the government to monitor banks' lending to small firms and ensure that lenders stick to their bail out obligations.

Calls were also made for banks to protect entrepreneurs by not securing loans on personal assets until all business asset security options have been exhausted.

Orford told Brown that the FPB wishes to see the FTSE 250 companies “adopting the principles of corporate responsibility when dealing with their supplier base”.

He said: “By paying them promptly, these large companies can significantly improve the cash flow of small firms, which are already being squeezed by the credit crunch. It would mean that many more would be better equipped to survive the downturn.”

Members of the FPB are being surveyed every two weeks as part of an “economic downturn panel”, providing evidence on ways in which the credit crunch has affected them.

More than 70% of members on the FPB's economic downturn panel reported that, prior to September 20008, borrowing facilities were “as expected”. However, 43% now consider them to be “worse than expected”. In addition, 47% of members on the panel reported an increase in banking fees.

Thirty-two per cent said they were not satisfied with the banks' response to the economic situation, and just 6% said they were satisfied with the government's support for small businesses.