The government says that the proposals - including extending its pledge to lead the way on tackling payment by paying its own suppliers within 10 days - are designed to preserve small firms' cash flow by improving access to finance. The FPB is calling on banks to commit to preserving and improving credit lines for small firms.

"Following a meeting of the Small Business Forum, where the FPB called for real measures to assist small businesses in the economic downturn, the government appears to have put together a useful raft of initial measures," said Phil Orford, Chief Executive of the FPB.

"In particular, the FPB welcomes efforts to ensure that the public sector organisations pay suppliers within 10 days, and that credit management skills and other training is improved to help businesses negotiate their way through the downturn. While we welcome these measures, the small business lobby groups, politicians and the media must continue to pressure banks to live up to their responsibilities and restore lending to 2007 levels, as has been promised."

In a statement, the government committed to:

• Work with NHS trusts, local authorities and other public sector employers in England to extend to them the payment target of 10 days, a proposal that has already secured the signature of England's Regional Development Agencies (RDAs) - which spend £750 million per year with suppliers.
• Offer free ‘Health Checks' for businesses in England through the Business Link support service, helping to identify problems early and to help them survive in the current financial climate.
• Prioritise training for small firms in England under the Train to Gain initiative, ensuring employees have the skills and business knowledge they need.
• Provide financial information, produced by the Institute of Credit Management, to help UK businesses to maintain cash flow, secure finance and limit problems caused by late- or non-payment.

"We are on the side of small and medium sized businesses", said Peter Mandelson, the Secretary of State for Business, Enterprise and Regulatory Reform, "and understand that they are facing tough times. The government has taken steps to ensure that banks can start lending to them again, but we're determined to do more. Businesses tell us they need access to cash flow. That's why central government has committed to paying businesses within 10 days - and we're urgently speaking to the wider public sector to extend this commitment. We want everyone in the supply chain to pay their bills more quickly."

In the FPB's latest quarterly survey of members, almost one in three respondents (31 per cent) said they consider late payment to be a ‘significant' barrier to the growth of their businesses. Access to finance was considered to be a barrier by 13 percent of respondents.

Follow-on and monitoring service

The Government hopes that the free business health checks outlined in the package will provide personalised support and confidential advice for all businesses on maximising cash flow, marketing and business planning. Business Link will also provide a follow-on and monitoring service, and free financial guidance will be available from the Institute of Credit Management on effective invoice chasing, debt management and credit insurance.

In the short-term, increased access to credit and the ability to better manage their cash-flow will be the keys to small business survival. The UK economy will also benefit in the medium-term from the regulatory and tax system reforms that will help small businesses take advantage of new opportunities when the worst of the economic crisis is past.

www.fpb.org

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