Small businesses’ overdrafts have increased by 33% in the past year, prompting calls from the NFRN for banks to do more to support local retailers.

According to a report by specialist debt adviser Hadrian’s Wall Capital (HWC), the challenging retail market has led to banks steering towards short-term loans, repayable on demand. The study found that 11% of the current £416bn in retailer loans are long-term, down 77.5% from 2012.

As a result, Marc Bajer, chief executive of HWC, said: “Having retailers borrow more on their overdrafts, rather than through term loans, means the banks can call in the debt if they get nervous. This gives businesses very little certainty over their borrowing, and makes it difficult for them to plan for the future.”

NFRN national president Mike Mitchelson said: “Banks do not offer the services our members require, and the fees they charge for basic services are unaffordable. It’s time that the banking system supported micro businesses if independent retailers are to survive and thrive.”

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