The Bank of England latest statistics showed a £200 million decrease in loans to smaller businesses during July.

Mike Cherry, Federation of Small Businesses (FSB) National Chairman, said “Small businesses appetite for new finance is waning against a backdrop of unprecedented uncertainty, anaemic domestic growth and inflationary pressure weighing on consumer demand. Investment intentions are not where they should be and firms will only seek growth finance again when they have a clearer sense of what the future holds.

“What we’re starting to see is a convergence of factors that could seriously threaten small business access to finance across the country. On the one hand you have reports that the European Investment Fund is already starting to pull up the drawbridge. On the other, the Funding for Lending scheme coming to a close in January. We look forward to feeding in to the Treasury’s financing growth consultation to ensure we have the right mechanisms to replace these sources of support post-Brexit. They represent vital lifelines for ambitious and innovative small businesses aspiring to grow and scale-up.”

“A botched withdrawal from the EIF would mean a significant shock to small business finance markets. We need to see its replacement finalised sooner rather than later. It is crucial that negotiations with the EU 27 on the UK’s exit are productive and guided by economic rationality on both sides. In particular businesses urgently need clarity and certainty on the nature and length of transitional arrangements once we have left the EU.”