MORE than one in four small businesses in the region are relying on credit cards to fund expansion because bank loans are too much trouble, the Federation of Small Businesses (FSB) said yesterday.

The FSB, launching a survey of its members called Barriers to Business, also said more than 16 per cent of businesses had changed banks, mainly due to a lack of personal service.

John Wright, regional policy chairman of the FSB, called on banks to change their levels of service towards small businesses and make it easier for them to get loans and overdrafts.

He said: "Banks should be making things a lot easier and go back to having local bank managers and not central technologies to determine whether a small business should get a loan.

"Local bank managers used to know the businesses and judge on a personal level whether it was feasible to give a loan - now it is all about projection figures and business plans, and it is putting off small businesses."

But Barriers to Business also showed that the spirit of entrepreneurship was booming in the North-East, with a higher than average number of business start-ups.

There was an increase in employment by small businesses since the FSB's last survey. Thirty per cent reported a rise in the number of employees, with only 15 per cent saying there had been a decrease.

Businesses were growing more steadily in the region, with fewer predicting rapid growth and more saying they expected profit and turnover to stay the same.

But export growth was disappointing, with only one per cent reporting high levels of export sales to the EU, in line with the national average.

Nearly two-thirds said there had been increases in sales volume in the previous financial year, while nearly half said profits had increased.

But the region's businesses were the hardest hit by the effects of the national minimum wage being introduced, with nearly a quarter having to increase the salary of at least one employee.

Mr Wright said: "This survey is absolutely vital for the FSB to continue lobbying, and it is important for government policy because it includes non VAT-registered businesses, something which is not included in government surveys.

"It puts us in a stronger position to lobby MPs, regional development agencies, and the North-East regional assembly, if it goes ahead.