Tory leader David Cameron has urged the government to allow small businesses to defer paying VAT for up to six months.
Tory leader David Cameron has urged the government to allow small businesses to defer paying VAT for up to six months.
He said councils could also help by paying small businesses for their services earlier.
He said councils could also help by paying small businesses for their services earlier.
Business Secretary Lord Mandelson told the BBC he was concerned about banks changing loan arrangements to small businesses, then charging them for it.
Business Secretary Lord Mandelson told the BBC he was concerned about banks changing loan arrangements to small businesses, then charging them for it.
He said he would concentrate on firms who had good long-term prospects facing short-term cash flow problems.
He said he would concentrate on firms who had good long-term prospects facing short-term cash flow problems.
BBC political correspondent Norman Smith said the Conservatives wanted to ease the tax burden on small businesses, having already offered to cut corporation tax by 20% for small and medium-sized firms.
BBC political correspondent Norman Smith said the Conservatives wanted to ease the tax burden on small businesses, having already offered to cut corporation tax by 20% for small and medium-sized firms.
'Beating heart'
'Beating heart'
On Sunday they suggested allowing such businesses to defer VAT payments for six months - they would still have to pay interest on the deferred tax of 7.5% - to ease up cash flow problems.
On Sunday they suggested allowing such businesses to defer VAT payments for six months - they would still have to pay interest on the deferred tax of 7.5% - to ease up cash flow problems.
In an article in the Observer, Mr Cameron said banks must treat small businesses "fairly".
In an article in the Observer, Mr Cameron said banks must treat small businesses "fairly".
He added that further Conservative plans to help families, homeowners and entrepreneurs would be laid out "in the coming months".
He added that further Conservative plans to help families, homeowners and entrepreneurs would be laid out "in the coming months".
In the long term, we've got to repair our economy by getting the public finances back in order David Cameron
Lord Mandelson urges banks to do more to help small businesses
"We intervened to prevent the beating heart of our economy - the financial system - from collapsing. We've got to do the same for its lifeblood.
"We intervened to prevent the beating heart of our economy - the financial system - from collapsing. We've got to do the same for its lifeblood.
"Small and medium-sized businesses employ over 13 million people and turn over £1,440bn a year.
"Small and medium-sized businesses employ over 13 million people and turn over £1,440bn a year.
"In the short term, we've got to help families up and down the country with proposals to get them through the downturn.
"In the short term, we've got to help families up and down the country with proposals to get them through the downturn.
"In the long term, we've got to repair our economy by getting the public finances back in order."
"In the long term, we've got to repair our economy by getting the public finances back in order."
Spending projects
'Not good enough'
Meanwhile the government has said it will help the economy by "reprioritising" spending to create jobs - putting money into big projects such as the 2012 Olympics and London's Crossrail scheme.
Later Lord Mandelson told BBC One's Andrew Marr Show the government would look at the banks' attitude to giving loans to small and medium sized businesses "during this contraction".
The chancellor told the Sunday Telegraph it would be wrong to cut back on spending and take money out of the economy - he said it would be financed by extra borrowing.
Later Business Secretary Lord Mandelson said it was not a "spend, spend, spend" approach, saying Britain had paid back a lot of debt over the past 10 years and was in a better position to borrow than other European countries.
We have made clear what we expect and what the condition is for our investment in those banks Peter Mandelson
He told BBC One's Andrew Marr Show: "Those costs of doing too little will be greater than if we take the action to maintain spending and investment in the real economy - in public services and in infrastructure too."
He also said the government would look at the banks' attitude to giving loans to small and medium sized businesses "during this contraction".
"One of the things that concerned me, I must say, is that banks are not only suddenly and unilaterally changing the loan arrangements and conditions on which they are making finance available, but they are also charging the firms higher administrative costs for making those changes in their loan conditions. That is not good enough."
"One of the things that concerned me, I must say, is that banks are not only suddenly and unilaterally changing the loan arrangements and conditions on which they are making finance available, but they are also charging the firms higher administrative costs for making those changes in their loan conditions. That is not good enough."
He said those banks in which government was taking a stake had a commitment to "broadly maintain the availability of finance" for the housing market and small and medium firms that was available in 2007.
He said those banks in which government was taking a stake had a commitment to "broadly maintain the availability of finance" for the housing market and small and medium firms that was available in 2007.
Lord Mandelson urges banks to do more to help small businesses
"We have made clear what we expect and what the condition is for our investment in those banks."
"We have made clear what we expect and what the condition is for our investment in those banks."
With other banks, he said he and the chancellor would talk to chief executives about taking a more flexible approach about maintaining credit lines.
With other banks, he said he and the chancellor would talk to chief executives about taking a more flexible approach about maintaining credit lines.
The Chief Secretary to the Treasury, Yvette Cooper, has also called for banks and building societies to have a more responsible approach when home owners default on their mortgages.
The government is working on ways to tighten the rules when courts have to decide on repossessions.
The Council of Mortgage Lenders is predicting that the number of homes repossessed this year will reach 45,000, up from 26,000 last year.
Ms Cooper said no government could prevent a slowdown in the light of global problems but added: "What we can do is step in and, by dealing with the problems in the banking system, prevent the worst of the credit squeeze hitting people."
Do you operate a small business? What do you think of David Cameron's suggestion? Send us your comments on the form below.
Do you operate a small business? What do you think of David Cameron's suggestion? Send us your comments on the form below.
