Banks have failed to meet their lending targets under the terms of the Project Merlin agreement. The accord with the government drawn up last year was designed to promote lending to small businesses, but new figures reveal that there was a three per cent drop in net lending in the final quarter of 2011.
Overall, £74.9bn was lent to smaller firms, which was short of the £76bn Project Merlin target.
Research by the Federation of Small Businesses (FSB) found that 33 per cent of respondents had used their own savings or inheritance to fund their business.
John Walker, national chairman of the FSB, said: "Newer businesses are using more of their own money to fund their business rather than turn to the banks for help."
With businesses putting their own finances into their operations, this heightens the importance of having commercial insurance to help cover unexpected costs that may be incurred, such as a loss of stock.
