Small businesses will eventually feel the benefits of a high-profile lending scheme, according to a Kent banker.

A net £1.6 billion was lent under the Bank of England’s Funding for Lending scheme from April to June, the first substantial increase in lending since the scheme was set up last August.

Critics say most of that money was loaned on mortgages and that the figures are not good news for small and medium-sized enterprises (SMEs).

They saw lending shrink by a net £583 million during the quarter.

The scheme offers banks and building societies discounted loans in return for increasing lending to households and businesses.

But, while it has helped slash the cost of home loans, credit to small firms continues to fall.

Yet Lloyds TSB’s deputy area director for Kent and East Sussex, David Rawlance, says it is a matter of time before the increased lending to householders expands to SMEs.

The bank drew £3 billion from the Funding for Lending pot from April to June and has already taken another £2 billion in July and August.

It lent more than £24 billiion gross to UK businesses and homebuyers through the scheme in the April to June quarter.

Mr Rawlance, who is based in the Maidstone branch, said: “We are seeing confidence grow and we have accelerated the amount we have drawn from the scheme.

“We are really pleased with our figures at a local level and we are going to use Funding for Lending to pass on the full discount we get from the Bank of England for the term of the loan.”

The Federation of Small Businesses says less than a third of respondents to a survey they commissioned are aware of Funding for Lending.

They want to see banks communicate more about the cheaper finance.

National chairman John Allan said: “The rise in lending reported today and the fall in the price of finance is good news for small firms.

“The next step is for banks to make this cheaper finance available to more small businesses.

“We have been hearing from FSB members that obtaining finance remains an issue, so hopefully today’s news will continue to shift momentum on lending in the right direction.”