Lending to small businesses under a government backed loan scheme has fallen almost 25% in March.

Loans given to small companies through the Enterprise Finance Guarantee Scheme declined from £472m between April and September 2009 to £365m between September and March this year.

"This is a startling drop in loans under the scheme, which is completely at odds with the buoyant demand for funding from SMEs," said Phillip Monks, chief executive of Aldermore Banks.