The purpose of this paper is to show how banks have a critical role in helping SMEs by providing investment capital that businesses need and by offering sound financial advice through the growth of the company.
Using the Forum of Private Business (FPB) Bank Report of 2004, the total sample represents responses from the FPB and customers of six participating clearing banks. Although the total sample is used to compile performance indices by the bank, the rest of this paper is based solely on the FPB sample.
Business and their managers should improve their knowledge of financial management. Appreciation on the part of banks that SMEs' confidence in formalised process will be greater where small firms’ own representatives have set up contingencies to overcome relationship problems when trading difficulties arise.
It was found that in order to pursue economic competitiveness it is necessary for many SMEs to have a flexible working relationship with their banks.
