The Bank of England’s agent report for December has found that the central bank is seeing a rise in traditional lending to SMEs.

The monthly report said that banks’ interest in lending to smaller firms appeared to be increasing, which it said suggested some increase in lenders’ risk appetites, but that unsecured lending was rare.

The monthly agent report said corporate credit availability had continued to rise, with signs of an increase in lenders’ risk appetite, and that capital market finance remained readily available for larger companies with low costs.

Banks had continued to compete fiercely for high-quality lending business and reported significant refinancing activity, sometimes involving an extension of facilities.

British Banking Association chief economist Richard Woolhouse said; "Lending to smaller firms appears to be increasing and some sectors where credit had previously been very tight are now able to access bank finance more easily.

"We need businesses of all sizes to be confident about borrowing because that helps them invest and supports economic growth."