Banks are increasingly cutting credit facilities to independent retailers. And there have been examples where banks are pushing shopkeepers to take out personal loans to cover their business lending.
The latest quarterly survey from bira (British Independent Retail Association) confirmed that half of all independents had had their credit facilities reduced by their banks.

"Banks continue to eradicate the overdraft, with more than one in eight reporting a reduction in facilities in the last quarter alone," said the association.

As most businesses have a bank review once a year that equates to at least half of all independents having their overdrafts cut in each of the past two years - "a sobering sidelight on official encouragements to banks to increase lending," said the report.

In the latest survey a hefty, 12.99% said their lines of credit had been withdrawn. "We were hearing anecdotal evidence that the cutting of credit was happening," Michael Weedon, bira's deputy ceo, told DIY Week. "So we included a question on it in our surveys. We've been monitoring this for two years now.

With all small businesses, the overdraft is their lifeblood. What's also worrying is that the other major credit area is credit with suppliers and we have retailers having their credit insurance withdrawn."

The survey included the question: "Has your business been affected recently by the withdrawal of credit insurance cover from any of your suppliers by credit insurers?"

Some 6.58% replied: "Yes."

Mr Weedon said that hardware and housewares retailers would be less affected than more highly seasonable sectors such as fashion but garden centres could well be hit by withdrawal of insurance.

He also noted that bira was hearing examples of banks asking shop owners to take out personal credit to cover their businesses borrowing needs. "It's not just sole traders and partnerships," told DIY Week, "it's also happened to limited companies."

Asked whether this meant small retailers could well have to put their houses at risk to support their businesses, he replied: "Well, exactly."

One bank that was firmly on the side of independent retailers was bira finance, the only trade association owned bank in the country. In July, Mr Weedon said it had lent a record amount to bira members.