Banks are imposing a range of charges including increasing interest rates and demanding personal guarantees as preconditions for lending to small firms, according to the Forum of Private Business (FPB).

With recent research by the FPB revealing that the cost of finance is a major issue for 63% of small firms, and a ‘very serious concern' for 19% of SMEs, new bank charges are a major concern.

"It is becoming clear that steep interest rates, a range of charges and demands for additional security are combining to create a significant cost barrier preventing viable yet struggling firms from securing the funding they need," said Phil McCabe of the FPB.

Despite the interest rate being kept at a historic low of 0.5% for six successive months many small business owners are still finding the cost of lending to be too high.