Lending under the Enterprise Finance Guarantee (EFG) scheme fell by nearly a quarter in the six months leading up to the election.
Business groups have responded by urging Vince Cable, the business secretary, to challenge high-street banks to lend more liberally and slash the cost of the scheme, which was set up to boost lending to small to medium-sized businesses by the Labour government.
High-street banks lent £472m in the six months to September under the EFG, according to official figures obtained by small-business bank Aldermore, but that figure fell to £365m over the subsequent six months, during which time the total number of individual loans also collapsed, falling 18% to 3,583.
Phillip Monks, chief executive of Aldermore, says: "This is a startling drop in loans under the scheme, which is at completely at odds with the buoyant demand for funding from small and medium enterprises that we are seeing."
The Federation of Small Businesses (FSB) echoed Aldermore’s concerns, accusing the previous administration of applying insufficient pressure to encourage banks to lend.
