New stealth banking charges are nullifying the slow increase in bank lending to small and medium-sized businesses, according to Clifton Asset Management (CAM).

The financial firms say that they have found that lenders are trying to persuade SMEs to convert their overdrafts into loans that have higher interest charges and more stringent repayment terms.

"The evidence of recent weeks seems to show that the banks' long-held claim - that they are continuing to lend to SMEs - may finally be starting to ring true," said CAM's managing director Neil Greenaway.

"Unfortunately the caveat to this is that they are increasingly adding on hefty charges for things such as arrangement fees, facilitation fees, audit fees and review fees, all of which come in addition to the interest on the loan."