Under the agreement Barclays, HSBC, Lloyds Banking Group, RBS and Santander were tasked to achieve an aggregate lending of £19bn a quarter to SMEs, but the group announced levels for the first quarter of £16.8bn, claiming slow overall economic growth and 'muted demand' from the sector.
However, the Federation of Small Businesses (FSB) said that what the banks call muted could well be that "businesses have become fed up of asking".
A spokeswoman said: "We're still hearing stories of businesses having trouble accessing finance. If the cost of financing is unaffordable, if it's offered on unsustainable terms, then it's not necessarily true that businesses are not asking for finance. We would really want to see more detail.
"What we really need is for the ICB (Independent Commission on Banking) to push for greater competition."
The Merlin group referenced a CBI survey from April that found just 8% of SMEs saying finance was a concern "reflecting the efforts that the banks have made in honouring their Merlin commitments".
A spokesperson for the group said: "These numbers demonstrate the determination of the Merlin banks to lend to viable businesses – it has been a solid start to the year. We are devoting considerable time, effort and resource, particularly through the Better Business Finance initiatives, to ensure that we help viable businesses to access finance. Nonetheless, economic conditions remain challenging, and demand for lending is likely to vary through the year."
FSB national chairman John Walker said: "It is not surprising that the banks have not met lending targets to small firms. A recent survey of members of the Federation of Small Businesses found that only 16 per cent had approached the bank for credit and of those 44 per cent had been refused."
However, FSB data suggests that confidence is slowly returning to the SME sector, with its quarterly Small Business Index showing a swing to a +6.7 after staying negative throughout 2010.
The government too released figures showing that the number of new businesses was up 1.1%, or 48,000, since the start of 2009.
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