However, the figures published in the latest SME Finance Monitor, a quarterly publication carried out by BDRC Continental since July 2011, indicate that awareness of the government scheme is actually on the rise, albeit slowly.

In Q4 of 2012, just 24% of SMEs said they had heard of the scheme, which was launched by the Bank of England and the Treasury last year, offering cheap credit to banks on the condition that they improve their lending levels to businesses and home-owners.

The monitor also shows that the number of SMEs using external finance dipped to 39% in Q1 of 2013, down from 50% in the same period last year, and its lowest level since the monitor began.

The monitor is carried out on behalf of the Business Finance Round Table, made up of around 20 business, manufacturing and financial organisations.

Each quarterly survey involves interviewing a cross-section of 5,000 businesses across various sectors and regions.

Another key issue to be highlighted by the latest raft of interviews, which were carried out between January and March this year, was a contraction in the amount of SMEs using credit cards, loans and overdrafts. The use of these core banking products shrank to 32% from 40% year-on-year.

Meanwhile, of those that had been declined a loan or overdraft only 9% and 15% respectively said they were made aware of the appeals process.

Of the 19% interviewed that said they would like to apply for finance but were unlikely to, 63% cited the economic climate, up from 50% in Q4 of 2012, while 23% said it was the performance of their own business that was an issue.

Phil Orford, chief executive of the Forum of Private Business, said the decline in lending was no surprise. “But if this trend continues into Q2 and Q3, eyebrows may be raised with all the talk recently of recovery, not to mention the government’s ‘supercharging’ of the Funding for Lending scheme,” he added.

“It seems likely that the banks are still licking their wounds, and that may be the case for some time to come yet, but this pattern of decline can’t continue if we are to have meaningful growth.”

Orford said that it was highly likely that any recovery this summer would come largely from firms spending their own stockpiled cash, but he warned that this was not sustainable in the long term.

Other figures show that 70% of all applications for new or renewed overdraft or loan facilities were successful, with overdraft applications more likely to be successful than those for loans.

However smaller (up to nine employees) and younger SMEs or those with a poor credit rating, were less likely to successfully secure a first-time loan or overdraft, 41% and 38% respectively.

BDRC Continental Shiona Davies said: “We are seeing signs of SMEs retrenching with fewer using external finance and more saying they want to but they won’t because of the economy.

“But there are positive signs. Awareness of the FLS is 27% and growing. It doesn’t sound very high, but actually SMEs as a group simply aren’t very aware of these schemes, particularly the smaller ones who tend to operate on a need-to-know basis because they don’t have time to sit around reseraching things. So growth here is posititve.”

Davies said that although the majority of loan applications were being accepted nearly half of those asked didn’t apply for loans because they felt they would be rejected.

“There is a need for more confidence, which will partly come about as the economy improves but also as people become more aware of the finance options available to them.”