The percentage of small and medium-sized businesses (SMEs) seeking asset finance, including invoice finance, more than doubled in the final quarter of 2016, according to the Federation of Small Businesses (FSB).

The Federation of Small Businesses (FSB) report ‘Voice of small business index Q4’ found that among SMEs that applied for credit during the period, 29.8% used asset based finance, more than double the 13.7% seen in Q4 2015.

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The report also found that credit availability and affordability worsened in Q4 2016, with an increase in the number of businesses being given interest rates of 11% or more and a decrease in rates below 4%, since Q4 2015.

Small business confidence was up to 8.5 on the index, from a 2016 low of -2.9 in Q3. Despite this, confidence in Scotland plummeted to -29%, and to -2% in London, and 47% of SMEs nationwide expected no growth.

The report also found that and 44% of small and medium sized businesses (SMEs) were already operating below capacity.

Exports increased 19% in Q4, but 56.6% of firms reported an increase in their costs of operation over the last three months, with 28% of respondents citing the weakness of the pound as the greatest cause of inflation.

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Jim Reeve, commercial risk solutions interim managing director at RSA said: “Increasing costs brought about by the drop in sterling are having an impact, with fewer SMEs expecting to grow this year.

“In order to strengthen their businesses, owners should review their cash flow and access to finance to check if they can cope with higher costs or lower revenues.”