The latest BoE agent’s report, which coincided with the launch of the government's National Loan Guarantee Scheme (NLGS), found that some banks were reluctant to lend to small businesses because of the high administrative costs associated with small loans. It said that some businesses are being forced to seek alternative sources of funding, such as from business angels or peer-to-peer arrangements.

Banks are also continuing to encourage small businesses to use asset-backed forms of borrowing, rather than overdrafts, the report claims.

NLGS participants RBS, Barclays and Santander confirmed that lending criteria will be not be relaxed under the government-backed scheme, which could mean that some small businesses will still struggle to qualify for loans.

Furthermore, some of the banks participating in the NLGS, including Barclays and Santander, will not lend less than £25,000, although a spokesperson for Barclays said this limit could drop in the future.

The NLGS, which was included in George Osborne’s Budget, will see the government provide state guarantees against unsecured loans made by UK banks to businesses with a turnover of less than £50m. The scheme is intended to pass on the benefit of the government’s low borrowing rate to UK business and is expected to lead to a 1% cut in the rate of interest charged.  

A spokeswoman for Santander said: "Under the NLGS scheme, the loans are not guaranteed to businesses; the scheme guarantees cheaper funding to banks so that they can make the loans. The NLGS will have no impact on risk appetite.

A spokesman for RBS said: "The lending criteria will be no different than for loans that are not part of the NLGS; a business will still need to demonstrate that it can repay the money. Businesses can borrow as little as £1,000 from us and we are the only major bank with a limit as low as this."

THe spokesman said that RBS is seeing a lack of demand for finance, before adding: "Our approval rates for loans have gone up and are currently at about 90%. Hopefully the NLGS will stimulate more demand for finance."