A SMALL business lobby group is calling on Chancellor George Osborne to introduce tax breaks for private lenders in today’s autumn statement.

The Forum of Private Business (FPB) said such a move would boost competition in small business borrowing markets and bring down the cost of loans and overdrafts.

The FPB has submitted a number of proposals to the Chancellor, including a freeze on fuel duty and business rate rises set to kick in early next year.

FPB chief executive Phil Orford said: “The Government should encourage private lenders by easing their tax burden when they invest in small businesses, often taking risks where mainstream banks fear to tread.

“It is already incentivising venture capitalists taking equity stakes in firms. Small businesses need a range of finance options but the preferred funding route remains lending at interest.

“Providing a tax environment that encourages private lenders to come forward will increase competition, drive up levels of service and bring down costs.

“More broadly, in order to help small businesses to drive economic growth we need a tax system that is fit for purpose, one that is simpler and more proportional rather than benefiting large companies at the expense of small firms.”

A recent poll of FPB members revealed that 24% of small business owners wanted more choice between “traditional” banking services and 21% wanted better access to alternative forms of funding.