The lack of availability of credit will continue to hurt small businesses over the next three months unless the government takes imminent action to ease lending conditions, the CBI has warned.

The Confederation of British Industry's latest ‘access to finance’ survey found that almost two thirds of firms trying to get more funds felt that availability had worsened over the past three months, and 59% believed the situation would deteriorate further over the next few months.

Nearly two in five firms said they have reduced staff numbers over the past three months because of credit-related issues. When it comes to large firms this rises to almost half, 40% of which have also cut back on production.

The CBI said the government must put forward a clear timetable for the different initiatives it has proposed to ease the liquidity crisis if it is to improve confidence among business owners.

"We have urged the government to move as quickly as possible to set out when the various support packages to tackle the credit crunch will come into effect, and to implement them quickly,” said Richard Lambert, CBI director general.

"In the very short term, good, viable businesses are facing real pressures on costs and cash flow and are thinking about painful decisions of making skilled workers redundant."

The Federation of Small Businesses (FSB) also called for more assistance for small companies.

"The government must use its meetings with the banks to monitor the guarantee scheme and assess why loans are still being refused, while both government and bank branch managers must do more to promote these funds," said FSB chairman John Wright.

© Crimson Business Ltd. 2009