The credit crunch has not deterred banks from lending to small businesses, the British Bankers’ Association (BBA) has said.

Figures for the main high street banks that offer small business services have revealed that borrowing has continued to grow.

In the 12 months to June, term lending was up 11 per cent to £44 billion. Borrowing on overdrafts stood at £9.2 billion, a 3 per cent increase compared with a year ago.

The BBA said that total small business deposits were £54.5 billion, a 6 per cent rise over the year.

New banking arrangements were set up for 543,000 small firms, with four out of ten small businesses opting to bank online.

David Dooks, the BBA’s statistics director, said: “Banks are still providing finance to support small businesses in the slowing economy, despite the impact of the credit crunch on lenders.

“These figures reflect the economic climate for the small business sector, with borrowing continuing to expand, but deposit growth slowing. In the face of weaker trading conditions, businesses are using all the cash they generate, while those seeking finance are generally taking fixed rate structured loans or using previously agreed facilities.”