By Kevin Peachey
Personal finance reporter, BBC News
For the last 17 years Tony Sykes has run a business supplying audio-visual equipment. But never has the picture for the future of his firm been so unclear.
He employs eight staff at the business based in West Yorkshire, which supplies everything from projectors to disco gadgets.
But while banks have been keen in the past to be flexible over overdraft facilities given to small businesses such as his, they are now sticking strictly to loan limits.
This is leaving these firms with cash-flow problems, despite running a steady ship, he says.
"By tightening belts and sticking to overdraft limits, this is putting small businesses in trouble," he says.
Credit crunch bites
His story is typical of the situation faced by small businesses and homeowners across the UK as they feel the bite of the credit crunch.
"We think it is a positive move towards collaboration from all parties involved in the mortgage market"
Banks eager to escape further problems have drawn in their lending.
They now face a difficult balancing act between supplying the credit that is the oxygen for small businesses, and protecting themselves from the bad debts that got them into trouble in the first place.
The same is true with mortgage lending.
Because there are fewer active lenders, with access to less money, "mortgage rationing" has returned, Michael Coogan, director general of the Council of Mortgage Lenders said in a speech on Tuesday.
Yet, ever since some banks were bailed out by the government, the clamour for renewed lending has been getting louder and louder.
Mr Sykes points to the irony of the banks being stricter with small businesses, after some were helped by these businesses' taxes.
"Massive amounts of our money is with the banks now; we need to see more pressure on them to put money back into businesses," he says.
See who has cut mortgage rates
Government panel
With similar cries ringing in his ears, Chancellor Alistair Darling announced the creation of a new Lending Panel in the pre-Budget report.
The panel, he said, would "monitor lending to both businesses and households".
Its first meeting is imminent, but the Treasury has so far offered little in terms of detail.
It has not yet explained the panel's scope, membership, or aims - or even confirmed the date of the first get-together.
Those are the details that businesspeople such as Mr Sykes in West Yorkshire want to know about - although he would prefer to be given the opportunity for small businesses to quiz bank bosses and the politicians directly.
On Tuesday, Lloyds TSB and HBOS - which are in the process of merging - stepped up to announce a six-point plan to help small businesses.
This included promising not to change overdraft terms during the term of a company's agreement, which is usually 12 months, and agreeing to any reasonable request for short term financing.
Membership
The Treasury has promised to publish more details about the Lending Panel later in the week or early next week.
So far it has said that the government, lenders, regulators and the Bank of England would all be involved, as well as consumer, debt advice and trade groups.
Key statistics
However, spokesmen for watchdog Consumer Focus, housing charity Shelter, and the Citizen's Advice Bureau all say that so far they have not been invited to join the main panel.
One group definitely involved is the Council of Mortgage Lenders.
"We think it is a positive move towards collaboration from all parties involved in the mortgage market," a spokeswoman for the lenders' group says.
"We hope it will identify the right information to help the market assess progress; and we hope it will act as a forum to identify new policy measures to bring about more positive lending conditions."
In terms of mortgages, the pre-Budget report documents reveal that the panel should draw up a plan for a better way of monitoring the mortgage market.
It will also "encourage" high standards among lenders in dealing with homeowners who struggle with mortgage repayments, and "promote" awareness of scheme aimed at helping these people stay in their homes.
This suggests the panel will be a useful discussion forum, but will it have any teeth?
Passing on rate cuts
Many homeowners will be disappointed that it will not meddle in lenders' commercial decisions on whether to pass on cuts in interest rates to mortgage-holders.
The Bank of England's Monetary Policy Committee is widely expected to cut the Bank rate again on Thursday.
This reduction could be as much as one percentage point, although some mortgage brokers believe that a maximum of half of this will be passed on to variable rate mortgages.
The Bank rate fell from 5% to 4.5% in October, and then again to 3% in November.
Despite pressure on lenders from the government, figures compiled by mortgage advisers John Charcol reveal that only ten out of 69 lenders have passed on this two percentage point cut in full to standard variable rate (SVR) mortgage holders.
Barclays' mortgage arm, the Woolwich, is the only one of the biggest lenders not to have changed its SVR since the November Bank rate fall.
It remains "under review", according to a bank spokeswoman.
She points out that less than 3% of their mortgage customers are on SVR deals. Unlike many deals, customers coming to the end of a fixed-rate term move onto tracker rates, rather than the SVR.
The most recent movers, after calls from customers for clarity, was the One Account run by RBS.
The SVR for this brand was cut by one percentage point on Monday, although other RBS customers with a SVR saw the full 1.5 percentage point drop.
A new issue arose on Monday when one of the UK's biggest lenders, the Nationwide, stopped taking new SVR customers.
Good for some
Mortgage customers across the industry with deals that track the Bank rate have seen the burden of repayments easing.
According to price comparison website Uswitch.com, a customer with a 25-year £150,000 mortgage on an average two-year tracker rate of 6.27% has seen their monthly repayments fall by £134, to £856, following November's bank rate fall.
The availability of mortgages remains a key issue, especially for first-time buyers.
The value of mortgages loaned during October, according to Bank of England, was only 6% of the level a year ago.
Sir James Crosby, the former head of the UK's biggest mortgage lender HBOS, warned the government that the squeeze could reach an "unprecedented" level in 2009.
Without government intervention, he said, new mortgage lending by banks would be outstripped by the amount they received in repayments and redemptions.
It remains to be seen how much, if any, of this intervention is inspired by the new Lending Panel.
| Lender | SVR before BoE decision | SVR after BoE decision | Rate change (percentage points) |
| HBOS | 6.50% | 5.00% | -1.5 |
| Nationwide BS | 6.19% | 4.69% | -1.5 |
| Abbey | 6.94% | 5.44% | -1.5 |
| Lloyds TSB/ C&G | 6.50% | 5.00% | -1.5 |
| Northern Rock | 7.34% | 5.84% | -1.5 |
| Barclays | 6.64% | Under review | |
| RBS | 6.69% | 5.19% | -1.5 |
| HSBC | 6.25% | 5.44% (5 Dec) | -0.81 |
| Alliance & Leicester | 6.94% | 5.84% | -1.1 |
| Bradford & Bingley | 7.09% | 5.59% (7 Dec) | -1.5 |
| Bristol & West | 6.59% | 5.49% | -1.1 |
| Britannia BS | 6.30% | 5.30% | -1 |
| Yorkshire BS | 6.60% | 5.60% | -1 |
| GE Money | 10.39% | 8.44% | -1.95 |
| Coventry BS | 6.84% | 5.34% | -1.5 |
| Standard Life | 6.59% | Under review | |
| Clydesdale & Yorkshire | 6.64% | 5.14% | -1.5 |
| Chelsea BS | 6.94% | 5.79% (31 Dec) | -1.15 |
| Skipton | 6.45% | 5.95% | -0.5 |
| SVR: Standard Variable Rate. All changes on 1 December unless stated. |
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