British businesses are raiding their savings to pay higher interest rates on their debts, with a survey showing nearly one third are withdrawing funds to keep payments on track.

British businesses are raiding their savings to pay higher interest rates on their debts, with a survey showing nearly one third are withdrawing funds to keep payments on track.

A survey of 200 companies with annual turnover of more than £1 million, commissioned by Investec Bank, shows that between March and August this year 36 per cent of companies withdrew a total of £2.43 billion from their deposit accounts.

The average withdrawal for each company was £35,270, but 4 per cent of businesses redirected more than three times that amount, transferring £100,000 or more from their deposit accounts to help pay for credit costs.

A quarter took out less than £10,000, 6 per cent between £10,001 and £50,000, and 1 per cent between £50,001 and £100,000, the survey finds.

According to the British Bankers Association report, Supporting UK Business, small and medium-sized enterprises now face business loan rates of about 4 per cent, compared with the Bank of England base rate of 0.5 per cent.

Clive Lewis, head of enterprise at accountancy body the ICAEW, says that while the base rate has plunged from 3.05 per cent to 0.5 per cent since the start of the credit crunch, the rate typically paid by SMEs has dipped only slightly from 5.5 per cent to 4 per cent.