A large number of small businesses are having to rely on corporate credit cards to fund their businesses as banks continue not to offer traditional business loans.

It’s a worrying trend in the US, but one which could be repeated throughout the UK as banks rely on the greater interest gained on corporate credit card use to protect their positions.

Figures from across the pond suggest that US banks are lending around £8 billion less at the moment and suggesting instead that their customers choose their costlier corporate credit cards. Other figures show that business loans between $100,000 and £1 million were down nearly a quarter in 2008. Furthermore, studies have revealed that well over half of small business proprietors had raised business capital using a credit card.

And business leaders are unhappy, stating that credit cards are not only far more expensive, but are more rigid in their terms. And obviously, they offer no sense of advice, or help, that a business person might have usually received from a corporate banking advisor.

Small business owners are furious that a banking system, bailed out by tax payers money both in the US and in the UK, is apparently using that money to shore up their own finances and not pass it along into the greater economy.

And with many experts believing that renewed confidence from both the consumer and small industry is the only way out of recession, it would appear that banks are not playing ball.

Guest Article by Neil Camp