Banks have not reduced interest rates for business customers at all over the last months and have in fact increased interest rates for more than two thirds of customers, research by East & Partners suggests.East & Partners' half-yearly SME Banking report, for which the firm publicised some details yesterday, shows that 68.8 percent of small- and medium-sized business companies said they experienced an increase in their loan interest rate over the last six months.No SME interviewed reported a decreased lending rate, East said. East said the number of SMEs reporting an interest rate increase was more than double the number that reported an increase twelve months ago.The Reserve Bank of Australia's policy interest rate fell by four percentage points over the period covered by East's review. Banks have announced some cuts to small business interest rates over this time but have also acknowledged increases in margins for risk.Based on the evidence of East's regular survey work, those increased margins for risk have more than offset any notional benefit of reduced rates for borrowers.East defines small to medium businesses as those turning over between $1 to $20 million a year. The firm surveys 1500 businesses for each half-yearly report.The survey findings by East conflict with the quarterly data on weighted average interest rates paid by business published by the RBA. That data shows the average interest rate paid on business loans of less than $2 million fell to 8.0 per cent in the December 2008 quarter from an average of 9.2 per cent in each of the June and September quarters.For business loans of more than $2 million the weighted average interest rates paid by business fell to 6.7 per cent in the December 2008 quarter from 8.3 per cent in the June quarter.Quarterly data on consumer prices published on Wednesday by the Australian Bureau of Statistics shows a sharp decline in bank margins in the March 2009 quarter, though the CPI data will largely reflect trends in retail interest rates rather than business rates.The East business survey also captures data on the plans of businesses to borrow in the period ahead. East said the latest report shows that 51 per cent of SMEs are now looking to borrow in the next six months, down from 77 per cent twelve months ago.