The credit crunch is having a serious effect on small and start-up businesses, a leading credit management specialist has warned.

A poll of 400 companies by credit reference company Graydon UK found 56% of those surveyed would be more conservative in who they offer credit to during the rest of the year.

Managing director Martin Williams said: "Most new companies do business on credit, looking to buy off suppliers on a credit basis.

"New businesses are perceived to be more risky than more established companies.

"Because of this, businesses in their first 20 months are twice as likely to fail compared with more established companies.

"Credit managers have perceived wisdom and they are likely to turn the taps off on new businesses at a time when they need the help."

Mr Williams said the 400 sample companies were chosen from across the board although some sectors, such as fashion retailers, were feeling the pinch more due to a slowdown in consumer spending.

He said company owners could increase their chances of receiving credit by allowing suppliers to run credit checks on their home address.

Gareth Sear, of support organisation Business Link Sussex, said: "There is plenty start-up businesses can do to forge good relationships with their suppliers.

"Having the right systems in place that prove a start-up business has a solid foundation will instill confidence with suppliers.

"Agree terms of payment at the outset and monitor the payment system to ensure it's flexible enough to meet any different payment terms agreed with suppliers.

"Ideally a start-up business should have a visible payment policy that commits the business to paying undisputed bills on time.

"Becoming a limited company rather than a sole trader gives a business more visibility but business owners needs to be aware of the extra responsibilities involved."

The Federation of Small Businesses says entrepreneurs and small business owners are proving resilient against tough conditions.

East Sussex regional chairman Peter Archer said: "Credit is drying up, big companies are taking longer to pay their bills and fuel costs are having a massive impact.

"But small business owners are made of tough stuff and the size of their operations allows them to adapt to changing market conditions quickly."