Phil Orford, Chief Executive of the FPB, said: "The latest figures from the British Bankers' Association (BBA), for the quarter July to September, published on 24 November, state that total lending to small businesses has risen on an annualised basis from £49bn to £54bn, or some 9%. However, £44.8bn of this was term, or loan lending, up 10% over the same period, and only £9.3bn was overdraft lending, up by just 4%".

The FPB believes that, by comparing these figures with the net deposits of small businesses over the same period, which are holding up at a healthy £55bn, owners of small businesses would be within their rights to raise some pertinent and challenging questions to those banks that say there is a greater lending risk today than there was six or twelve months ago.

For example, term lending, primarily used for investment, has risen at a greater rate than overdraft lending, which is usually used for cash-flow purposes. There is a clear disparity between the types of lending, which reinforces the feeling that banks are risk-averse. Overdraft lending is what is required to give businesses immediate short-term liquidity, but growth in this area is not at the required levels.

However, a bigger issue – that has been overlooked to date – is that small businesses are supporting the major banks to a greater level than the Government; some £55bn compared to the bail-out support of £37bn. This raises the question of whether the banks are at risk at all. There is almost absolute parity between total small business lending and total deposits. All the banks are doing is lending money deposited by small businesses back to small businesses. The banks sit comfortably, within the small-business lending sector at least, with no net exposure as long as this parity remains.

"This makes the position of the major lenders look worse than has been stated. There are signs of positive steps being taken by banks, following extensive pressure, but these steps appear to be fairly risk-free. Banks must now significantly increase overdraft lending to support the small-business sector, which figures show is currently doing the most to support the banking sector. Whether the relationship is mutualistic is open to debate, but the banks must realise that, without their small-business depositors, they couldn't survive. Now is the time for banks to acknowledge this fact by delivering overdraft survival packages in return" said Mr Orford.

He added: "We have seen RBS and NatWest give certainty to business customers by freezing overdraft rates and promising not to withdraw existing lending facilities. Lloyds TSB is now committing to do the same and is going one step further by stating within its six-point charter that it will agree to any reasonable request for additional short-term finance. The action of both banks is welcome, but we must ensure that other banks follow their lead. The availability of additional finance will increase certainty for many business-owners, but, more importantly, it will give them the confidence to get on with doing business again."