Revealed on Friday, the data by Bank of England has shown that as much as £3bn fall has occurred in the loans and overdrafts lent to the British companies.

The data has raised concerns over the Bank's Funding for Lending Scheme (FLS). Also, it emerged that the British companies were struggling since December last year in wake of the fall in lending and hike in the borrowing costs.

The recent fall is almost three times the average fall that occurred over the last six months. It was found to be £1.3bn. The leading business firms have seen as much as £700m fall in loans and overdrafts to comparatively smaller firms during the month.

"We have long said that there needs to be more competition and sources of finance for small firms because relying on the big five is clearly not working", argued Steve Warwick, the London Regional Chairman of the Federation of Small Businesses.

He suggested that the businesses require access to more finance to recover from the crisis. The stiffer competition in the banking sector may boost this, he added.

It was learnt that the average interest rate paid by the companies increased to 2.86% in April. The figures averred that the banks were falling short of the cash that could help curb the threats to economic recovery.