The country's four main banks did little this year to help small and start-up industry, and should introduce new initiatives in 1998, the Small Firms' Association said last night. The lobby group said recent tax changes had benefited the banks, and that they should pass on some of the gains.

"There has been a lack of genuine support from the banks to help small business in the past 12 months," said Mr Brendan Butler, the SFA's director.

"Changes in corporation tax announced in the December budget will benefit the four major banks to the tune of approximately £39 million. When coupled with the changes announced in the January 1997 budget, our major banks will be approximately £59 million better off," he added.

The SFA called for a three-pronged approach to help small businesses. This would see a reduction in the cost of borrowing, new training programmes, and help with technology upgrades.

"The current cost of a five year term loan is approximately 10.5 per cent for a small company, while the equivalent rate for a major company is 6.75 per cent," Mr Butler said.

While the banks argued that the rate of failure amongst smaller firms was higher, company liquidations were in fact declining rapidly, he added.

"Small business faces two major challenges over the next 24 months; the introduction of the euro on January 1st 1999, and computer software implications of the year 2000," Mr Butler continued.

The banking community should introduce an extensive education programme for their small business clients to help them prepare for these challenges, he said.

"With the rapid scale of technology advances, many small companies are unable to meet the time requirements and costs associated with updating their computer systems," the SFA director said.

Special loan leasing and loaning facilities should be introduced to reduce the costs of purchasing equipment and software, he added, and technical support should also be provided.