THE relationship between small firms and their bankers has shown a dramatic improvement, according to a survey conducted by the Small Firms Association.

In the survey, to which 221 firms each employing less than 50 people responded, 35 per cent of the firms said their relationship with their banks had improved. SFA director Mr Brendan Butler - said the findings suggested that traditional "them and us" barriers between bankers and small firms may be breaking down.

"The figures suggest a major shift in how small businesses perceive their banks and there appear to be three underlying reasons for this - the overall strength of the economy, specific measures introduced by the banks to assist small firms and competition between the banks to do business with small firms as a niche sector."

He called on banks to continue to develop new tailored packages for small business clients. These packages should extend beyond finance to include "soft supports" such as training and mentoring, he suggested.

The survey found that 28 per cent of respondents used bank overdrafts to fund operations.