Lending decreased by £4.5bn in the three months to May, the Bank of England Trends in Lending report has revealed.

Overall lending to has SME’s also contracted over the last year despite lending to SMEs has contracted over the past year, despite the Bank of England handing out over £16bn to lenders through the Funding for Lending Scheme.

Paul Aitken, CEO of borro, said: “Our online personal asset-lending model sees over 60% of business come from SMEs, many of whom tell us they haven’t even attempted to access finance through the more traditional means, instead coming straight to us.

“We have seen our lending to small business owners and the self-employed increase over the last year, with loan values rising 41% from £17,000 to £24,000 in the last year alone.

“The plight of the Funding for Lending scheme has been further highlighted, with RBS announcing this month that it’s set to review lending to businesses after it was revealed that loans had fell by over a billion in the first quarter of this year.

Aitken said it was disheartening to see that banks have actually reduced the amount they loan.

Aitken added: “Looking at small businesses in particular, so many are struggling to keep their heads above water in the on-going economic climate, without access to shareholder cash or cash reserves that some of the larger companies can tap into.

“At borro we are witnessing continued growth particularly when it comes lending to small business owners and the self-employed, proof that alternative forms of finance are becoming more mainstream.”