However, small firms are still frustrated. Frustrated because information from the Government concerning small business rate relief is not getting through; frustrated because every day we hear about banks failing to lend a helping hand; and frustrated because blue chip companies are getting away with murder by unilaterally increasing their payment terms.

I frequently hear that Federation of Small Businesses (FSB) members are being rejected for loans. I've spoken to one firm which has watched its overdraft and loan fees increase. And customers are increasingly delaying their payments, which can leave small businesses right up against the wall.

As credit dries up and money becomes tight, the FSB is urging the Government and big business to protect small businesses in a number of ways.

Small firms are increasingly seeing their customers delay payments. Figures released through a snap poll by the FSB earlier this week – revealing the devastating impact the credit crunch is having on our members – showed that a worrying 51 per cent of members had seen an increase in their payment times from invoicing to full payment, reflecting our concern that large companies are improving their cash flow on the back of their smaller suppliers.

It is imperative that large firms pay small businesses on time. Small businesses feel that they are being backed into a corner: if they demand payment, they fear they will lose the contract.

We would urge politicians to use their privileged status in Parliament to name and shame large companies that increase payment terms unilaterally and don't pay on time. There will be some companies that can't pay but the brigade that won't pay must be challenged.

I am worried about the lack of clear information for small business owners. Small business rate relief (SBRR) is going untouched. Across the nation, only 41 per cent of small businesses claim back business rate relief. Money that is not claimed goes straight back to the Chancellor of the Exchequer. That money should be going back into small business trade. The SBRR needs to be automatic for small businesses with no need to engage in any application procedure.

The upward-only clause in rent reviews is another burden on small businesses. Rent is fixed at the beginning of the contract and at pre-determined intervals; the rental figure should be reviewed in line with market conditions.

So given today's market, one would assume rent reviews for thousands of small businesses would see a reduction in payments to their landlords. But the spectre of upward-only clauses in the majority of lease agreements means that the landlords will increase rents automatically, regardless of market conditions. We would urge the Government to ban such clauses.

The Government's actions this week are an encouraging step and will restore some confidence within small firms. Our survey showed that 80 per cent of respondents have seen their operating costs increase while
trade has slowed down. More than 40 per cent backed a decrease in interest rates.

We got this cut. However, it will only have the desired affect for small business owners if the banks follow suit and reduce their charges to small businesses. It is vitally important that the relationship between banks and small businesses is put on a sounder footing. We urge the Government, now that it has a stake in the banks, to ensure all base rate cuts announced by the Bank of England are honoured by the clearers. Only then will the weight of these economic burdens begin to lift.

Our high streets faced extinction even before the current economic downturn. In towns and villages across the UK, small businesses and local shops are facing closure. About 2,000 local shops are closing each year; and about 27 pubs a week are going bust; and, as we all know, 3,000 post offices are about to be closed.

Local shops are the glue that binds together communities, offering a personal and intimate service. We urge the Government and local authorities to take a serious look at some easy to implement proposals from the FSB's Keep Trade Local campaign. For example, supermarkets should be forced to allocate a percentage of their vast shelf space to local produce, and parking spaces should be freed up to encourage shopping on our high streets.

The UK economy relies on its 4.7 million small businesses, which employ 13.5 million people and pump trillions into the economy annually. This helps to pay for our schools and hospitals. If small businesses fail, our economy has no hope. However, if small businesses survive and thrive, then together we can claw our way out of these bleak times.


John Wright is National Chairman of the Federation of Small Businesses.