Finance schemes designed to help construction SMEs need to be simplified if they are to aid the economic recovery, warned the Federation of Master Builders (FMB) in response to a National Audit Office (NAO) report that criticises the Government for its confused approach towards business funding.

Brian Berry, Chief Executive of the FMB, said: "Initiatives such as Funding for Lending and the recently launched Business Bank, designed to make financing more accessible for small businesses, are failing to help construction SMEs because the banks remain reluctant to lend to them. Construction companies need to able to secure financing to grow their business in line with demand, which is why it is so important to remove any barriers that prevent this from happening.

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"Many small business owners are confused about which finance schemes they can access. We know from our members that banks, including those backed by Funding for Lending guarantees, are discriminating against companies operating in the construction sector. This is hampering house building, because two thirds of our house builders are citing difficulty in accessing business finance as a major barrier to their ability to build more new homes. Unless the Government acts now to unify and simplify the schemes on offer, as well as stamp out discrimination against building firms applying for the loans and overdrafts they need to buy materials, hire plant or take on extra staff, then the opportunities presented by the improving economic conditions will be lost."

(CD/JP)