The Bank of England (BoE) figures show that in the first three months of 2011, the ‘big five’ banks loaned £16.8 billion to small and medium-sized enterprises, more than £2 billion short of the lending level required to keep pace with the £76 billion target for the year.

BCC director general David Frost says, ‘The Project Merlin figures are disappointing, but they are only a part of the story for businesses.

Many companies complain about strained relationships with banks both during and after the recession.

Over-centralised processes, unclear decision-making and a lack of proper, local relationship management from banks, mean that in many cases, business customers have been put off applying for finance.

‘Banks should be able to make decisions at a local level about business customers’ financing needs.

Greater transparency, and local support from banks, go hand in hand with improved amounts of financing available to businesses,’ he adds.

Jason Stockwood, CEO of business insurance provider Simply Business, says, ‘Project Merlin does not include enough of an incentive for the banks to ensure the money available is actually accessible to the businesses that need it. It is clear that securing bank funding still involves a massively bureaucratic and slow application process that drains time and resource with no guarantee of success.

‘Unless the government puts more pressure on the banks it will seriously hamper public confidence in this administration.