Stuart Parfitt, managing director of Business Lending, said: “It is clear that for all the rhetoric from government, with all the public money being sunk into banks in order to stimulate liquidity, very little evidence of money reaching businesses has yet been seen. Sadly, banks are caught between competing expectations. On the one hand, they need to be seen to be shoring up their depleted resources in order to meet obligations to be prudent and yet also heed the call to let the leash slip and turn the lending tap back on. It’s very difficult for them and extremely frustrating for the thousands of businesses who are looking for funding.”

Business Lending is in the final process of finalising its own credit fund launch as a way of producing attractive returns to institutional investors as well as providing it with funds to lend in the commercial mortgage market.

Mr Parfitt added: “This is the right time for lateral thinking. As lenders, we are examining many different ways of sourcing new funds to lend and I am sure that a new breed of entrepreneurial lenders will emerge, who have found a way around relying on traditional sources of funding. At this point in the cycle I am confident that new forms of funding will lead the market back out of its current malaise.”