How can small companies survive the downturn and emerge stronger? A combination of faster payments, less red tape and easier lending terms may be the answer

As business secretary, I aim to ensure the government and UK businesses forge close relationships, so they can work together to tackle the hurdles ahead. If companies are to make it through the downturn in a positive state then it's definitely a case of all hands to the pump. There is no easy answer, but it is clear small firms must be open to fresh ways of thinking and explore new ways of doing business.

The pre-budget report in November put small business at the heart of the government's policies. It is essential we do all we can to help small firms survive the downturn and come out stronger. To achieve that, the Chancellor unveiled a number of financial measures, including £1bn in support for loans to small businesses, plus a further £1bn to exporters seeking working capital. This is a crucial step in providing businesses with access to the funds they need.

During the autumn, I met the chief executives of major High Street banks to discuss funding for small firms in detail. On the back of that, we established the Small Business Finance Forum to open dialogue between small companies and the banks. At its first meeting in November, the five leading banks agreed to provide data on the risk, availability and actual cost of lending to small and medium-sized enterprises (SMEs). It's vital that we correlate such data to keep an accurate picture of lending.

As part of a package of measures to support SMEs, the prime minister set a new challenge to central government departments to pay all bills within 10 days. BERR is working alongside local authorities, the NHS and other public-sector bodies to extend this commitment across the public sector. Fast payment is important to small firms, which rely on ready cashflow.

The business department will work with the largest companies—initially in the retail and grocery distribution sectors—and the big suppliers to government to develop a code of practice on payment terms. It is in no-one's interest to squeeze suppliers out of business or to drive up the costs to suppliers by extending credit terms.

The government is helping businesses through publicly funded support schemes to help companies grow and succeed. In launching the Solutions for Business package of 30 government-funded business support products and services, we aim to make it easy for firms to find the schemes they need. Business Link is the primary point of access.

But I must stress that these new measures are not in isolation. They will complement everything that BERR and the government are doing to help businesses, such as driving enterprise and cutting red tape. To date, we have saved business more than £600m by removing or simplifying regulation.

And we are committed to cutting the regulatory burden on companies by 25 per cent by 2010. I strongly believe that small companies are the backbone of our economy, but unfortunately they are often hit hardest in difficult economic times. It is essential that we all work together to develop long-term policies that will stand them in good stead for the future.