UK businesses borrowed £1.2 billion less in April 2013 than they did in March, according to the latest statistics from the British Banker’s Association (BBA).

The report, which details all of the credit offered by the main high street banking institutions in the country, found that April was one of the worst months in recent history for mainstream business lending.

Net lending fell to minus £2 billion – a decrease of £1.2 billion on March’s reported figures and £0.7 billion down on the six-month average – as several banks announced the recall of their commercial loan portfolios.

Property-related business borrowing continued to shrink at a rate of 7 per cent over the month, as bank lending within all sectors dropped at an increasing rate.

There were some signs of recovery, however, within the wholesale and retail borrowing arena, with lending to such businesses appearing to pick up.

The Association also reports that gross mortgage lending was maintained at £7.8 billion, remaining consistent with March’s level. The total represented a 4 per cent increase when compared with April 2012’s totals, however, and is indicative that mainstream mortgages are continuing to recover.

Net mortgage lending was also negative, as banks on average took in £200 million from borrowers over the course of the month.

This is a significant improvement on March’s levels, however, when net mortgage lending stood at minus £300 million.

Though the volume of approvals for house purchase and remortgaging continued to edge up in April, thanks to several government-backed schemes, approvals for other secured loans were some 37 per cent lower than in April 2012.

Such news suggests that the lower levels of available equity and a reluctance among homeowners to take on extra borrowing are having a profound effect on the banks’ approval processes.

Duncan Kreeger, director at peer-to-peer lender West One Loans, said: “In a disappointing set of figures one story stands out from the crowd – the serious deterioration in business lending. Two billion pounds is a huge chunk of funds to be removed from the net balance sheets of the UK’s businesses.

“This continuously poor performance is one of the reasons why alternative business finance is booming – it is now lending over £1 million pounds each day – and growing at a rate well into the double digits.”

He added: “Some members of the BBA are trying to lend more. But, sadly, the results speak for themselves – particularly in mortgage lending. This month in 2007 saw the very same banks lending more than twice what they’ve managed in April 2013.

“Mortgage lending has suffered a 60 per cent drop since this pre-crisis peak and even the most optimistic predictions don’t expect mainstream banks to take up that slack for perhaps a decade, if ever.”