Bosses of some of the UK's biggest banks will be urged to improve their treatment of small firms at a meeting with the government later.
Bosses of some of the UK's biggest banks will be urged to improve their treatment of small firms at a meeting with the government later.
Chancellor Alistair Darling and Business Secretary Lord Mandelson will tell bank chiefs measures are needed to soften the impact of the recession.
Chancellor Alistair Darling and Business Secretary Lord Mandelson will tell bank chiefs measures are needed to soften the impact of the recession.
As a condition of the £37bn government bail-out, RBS, HBOS and Lloyds TSB must continue lending at 2007 levels.
As a condition of the £37bn government bail-out, RBS, HBOS and Lloyds TSB must continue lending at 2007 levels.
But many firms have said the recent terms offered by banks have worsened.
But many firms have said the recent terms offered by banks have worsened.
BBC business correspondent Nils Blythe says there is also some confusion over what the pledge to maintain 2007 funding levels actually means.
BBC business correspondent Nils Blythe says there is also some confusion over what the pledge to maintain 2007 funding levels actually means.
Lord Mandelson has told MPs that banks will be urged to show greater "discretion and sensitivity" in their dealings with small firms.
Lord Mandelson has told MPs that banks will be urged to show greater "discretion and sensitivity" in their dealings with small firms.
In a Business Select Committee hearing earlier this week, he said there was anecdotal evidence that smaller businesses were being hit with a "double whammy" by some banks - being asked for more security and higher interest payments on loans, while also paying extra charges.
In a Business Select Committee hearing earlier this week, he said there was anecdotal evidence that smaller businesses were being hit with a "double whammy" by some banks - being asked for more security and higher interest payments on loans, while also paying extra charges.
Deal delays
Deal delays
The British Chamber of Commerce said that firms were finding it increasingly difficult to access funding.
The British Chambers of Commerce (BCC) said that firms were finding it increasingly difficult to access funding.
"The cost of money is undoubtedly higher than it was and we see no evidence of it coming down," said the BCC's director general David Frost.
"The cost of money is undoubtedly higher than it was and we see no evidence of it coming down," said the BCC's director general David Frost.
"Banks are charging for services that were previously parts of the deal.
"Banks are charging for services that were previously parts of the deal," he added.
"And the idea of relationship banking is breaking down. Everything is going through regional offices and it is taking much longer to get the okay on a loan or an overdraft."
"And the idea of relationship banking is breaking down. Everything is going through regional offices and it is taking much longer to get the OK on a loan or an overdraft."
No quick turnaround
A member of the Bank of England's rate-setting Monetary Policy Committee said it could be months before firms began to feel the benefits of measures planned to tackle the credit crisis.
"The banks need to feel that they are in a better position... I wouldn't necessarily expect that to turn around very quickly," Kate Barker said in an interview with finance website www.thebusinessdesk.com.
"We would certainly hope over the next few months that the actions that have been taken start to feed through to businesses because we certainly realise that small businesses particularly are finding it much more difficult."
Ms Barker warned that banks' lending policies were "not going to go back to how it was prior to this crisis starting".
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