A £500,000 fund to help small enterprises in Yorkshire affected by flooding has been launched by the Federation of Small Businesses (FSB).

The fund has been set up by the FSB, which has 16,000 member businesses in the region, to grant short-term, interest-free loans to member suffering hardship after flooding that has affected thousands of companies in the region.

Individual loans will not exceed £5,000 and will help businesses where no other support is available Among those expected to apply will be shopkeepers and other firms in Pickering and Pocklington who were devastated by the deluge.

The news has been cautiously welcomed by FSB member Tommy Neal, whose four businesses in Haygate Lane, Pickering, suffered when they were marooned by water in Mill Lane.

It meant that for two days last week Mr Neal's second hand car dealership, his car scrapyard, skip recycling centre and brick recycling centre were blocked at a cost of thousands of pounds.

Mr Neal said: "Loans to tide people over are a good idea but loans have to be paid back. It depends how long the repayment period is."

Chris Glen, the FSB Yorkshire and Humber policy chairman, said: "Every case will be judged on its merits when it comes to the length of the loan.

"We conducted a similar scheme when our members were hit by the effects of foot and mouth disease five years ago, and some were still paying us back two years later.

"We have been horrified at the extent of the devastation from the flooding caused by the persistent heavy rains."

Asked why the FSB, which receives subscriptions of about £20 million a year couldn't offer a grant rather than a loan, Mr Glen said that offering loans allowed the FSB to help more firms.

"We very much hope that this emergency fund will offer a vital lifeline to the worst-affected enterprises," he said.

* FSB members can apply to the fund by contacting their region on the internet at www.fsb.org.uk or by phoning the FSB head office on 0808 2020888.