Small business confidence has bounced back from record lows but worries about access to finance persist, according to the Federation of Small Business.

Access to finance is a “major barrier” to growth for more than one in five small companies, with 41 per cent of loan applicants refused in the three months to February, an FSB survey released ahead of a government review of lending later this week shows.

Overall confidence has bounced back from a record low of -24.5 three months ago, edging into positive territory at 2.2. A third of companies is looking to increase capital investment plans but without finance many of these plans might be hard to carry out.

“The problem is not so much the price of money but the access to it,” said Graeme Fisher, head of policy at the FSB. “Our existing banking system is not geared up for lower-end loans of less than £25,000, there’s no money in it.”

The data come as Tim Breedon, the chief executive of Legal & General, prepares to unveil his report into alternative methods of financing, such as peer-to-peer lending and an SME bond market , on Friday.

Vince Cable, the business secretary, warned last week that the economic recovery was “being imperilled” by a “yawning mismatch” between demands for finance from small business and bank lending.

As Britain tries to grow its small businesses to reduce dependence on the financial sector, lobbyists are looking abroad to see how other countries help SMEs.

Mr Fisher contrasted the British banking system, concentrated around a few big banks, with the multitude of small lenders in Germany and the US.

“In Germany you have these small banks with far lower rates of return, which are boring in the nicest possible way,” he said. “And in the United States, there is a very diverse banking sector which distributes government-backed loans.”

Most German SMEs have close links with one of about 1,500 local banks which are state-owned or mutually owned. These long-standing relationships have helped to make sure that lending to the small and medium-sized businesses of Germany’s mittelstand has not declined during the financial crisis.

New lending to businesses rose 4 per cent last year, according to the association of German savings banks, which represents about a quarter of the banks.

In the US, the Small Business Administration distributes funds through financial intermediaries as well as acting as an advocate for entrepreneurs, a model the FSB is lobbying parliament to follow.

Small business owners in the US also have greater access to alternative finance, such as peer-to-peer lending from companies such as Zopa.

However, Britain isn’t the only country where government is struggling to get banks to finance SMEs.

In Japan, the government has extended an “emergency” state guarantee programme introduced in 2009, under which banks were not required to immediately book bad-debt provisions for SME loans, even if the terms of that loan were changed at the request of the borrower.

Additional reporting by James Wilson in Frankfurt and Ben McLannahan in Tokyo

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