Small businesses could still go under unless the £20bn survival plan announced by the Government is rolled out immediately, according to a local chamber of commerce.

Gordon Brown revealed his plan to hand out loans to small and medium-sized firms to help them survive the downturn.

But Ray Hall, chairman of the Crystal Palace Chamber of Commerce, said businesses were scared the money would not come in time.

He said: “What I am hearing from small businesses is: ‘None of this will help me. My business can't hold on that long. I am facing closure’.”

“I think what is proposed is good if it can be delivered direct to businesses in need.

“Private sector agencies like South London Business working with and through individual Chambers of Commerce – with their membership networks – are crucial.

“Working through more public sector agencies tends to imply long processes and a lack of hands-on knowledge and response.”

Matthew Sims, general manager of Croydon Chamber of Commerce added: “Cash-flow is the biggest single issue for many firms and any move to get banks lending again is welcome news.

“Banks must be willing to lend to hard-pressed firms, to help plot a rescue route through the downturn.”

Part of the plan unveiled by the Government is a £10bn Working Capital Scheme, designed to help banks lend much-needed capital to small and medium-sized businesses.

The government will provide guarantees on 50 per cent of short term loans to businesses with a turnover of up to £500m.

But there are worries the banks will not lend sufficient funds to help business access the much-needed cash, with the economic climata continuing to make banks reluctant to lend.

Business secretary Lord Mandleson said the money would go to “smaller, viable, credit-worthy firms hit by the downturn”.

These companies will be able to borrow a maximum of £1m, with 75 per cent guaranteed by the government. The money can be used for working capital, he said.