By Daniel Hunter

On the fifth anniversary of the Lehman Brothers crash, the Federation of Small Businesses's survey of more than 2,000 small firms has uncovered that despite nearly half (49%) of businesses owners rating their business banking positively, the sector has much to do to improve small firms confidence.

While banks score well on their customer satisfaction levels and reliability of payment services, more than half (56%) of respondents believe that banks do not care about small businesses. Concerns remain over disproportionate salaries and profits, with nearly half (49%) of respondents raising this as a concern. One third of businesses also highlighted an increase in the fees paid to their bank across the past year. The average charge paid by a small firm is £1,075, with some paying more than £4000.

The FSB believes that for the recovery to take grip, and for small firms to turn to high street banks for their finance needs, this confidence gap needs to be closed. A crucial element in rebuilding that trust is for banks to repair communication with small business customers, having a relationship with them not only throughout the process of applying for finance but as they develop and grow their businesses over the long term.

For those unsuccessful in their applications to finance, signposting to other forms of lending when applications are denied is crucial. Only 37 per cent of small businesses knew about alternative lending such as peer-to-peer platforms, with only 18 per cent knowing about Funding Circle, a leading peer-to-peer lender, and a similar number for the challenger bank Handelsbanken. Equally disappointing is that while four in ten bank refusals are overturned on appeal, only 6 per cent knew about the appeal mechanism run by the banks.

It is clear more work needs to be done to publicise the diverse and growing range of non-bank finance providers. The Government needs to support and promote these new non-bank sources of finance either through regulatory means, direct funding through the business bank or by looking at the tax system.

"Since the financial crash five years ago, small firms' confidence in the banking system has been hit. Not only have they been plagued by inability to access finance and overnight changes to their lines of credit, these latest figures show they have faced increasing fees for banking services," John Allan, National Chairman, Federation of Small Businesses, said.

"Restoring this trust and getting banks to work in partnership with small firms is absolutely crucial for the recovery. We recognise the banks have done much and recognised their past mistakes, starting the culture change needed. However, our latest figures are a salutary reminder that process still has some way to go with more than half of our members believing the banks don't care about small firms.

"As much as a culture change in the banks, we must diversify the lending landscape as a whole. We fear that without real competition in the banking sector, small firms will only have the high street banks to turn to. We therefore urge the Government to maintain their efforts to promote non-bank sources of finance and thereby increase choice for small firms as well as competition in the market."

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