The government must look into creating alternative lending options for small businesses, according to the Forum or Private Business (FPB).

With small firms still finding access to finance difficult from high street banks, the FPB believes that a move away from bank lending could help many businesses to stay afloat.

The call comes in the wake of this week's Public Accounts Committee report, which found that the banks have broken their promises to lend to small businesses, placing many in danger of insolvency.

"Our research indicates that smaller businesses are too dependant on the banks for finance time, the recent crisis in the banking industry has made it clear that access to credit should be less dependent on the economic cycle. Any way of reducing the 'feast or famine' view of credit needs to be resolved before the next economic downturn," said Matt Goodman of the FPB.