'Tentative recovery' by small firms hit by credit crunch

Small firms hardest hit by the credit crunch a year ago are starting to report a "tentative recovery", new research showed today.

The Federation of Small Businesses (FSB) said it had found improvements since a low point at the end of last year, with an increasing number of companies seeing an increase in trade.

Up to 40% of small businesses had been hit by the cost of finance last year, but the number has fallen to one in four, according to a survey of 4,400 firms.

FSB chairman John Wright said: "Small businesses are naturally flexible and innovative in recessions and these figures show that despite the very many negative forces on them, they are being cautiously optimistic and are looking to expand.

"Although we are certainly not out of the woods yet, many small firms are seeing increased footfall and finding it easier to obtain crucial finance in the winter months, when things were at their worst so far.

"The Government must look to small businesses to build the post recession economy and help them employ more people and ease the bureaucracy and tax burdens which many still face."