The government survey of 4,500 businesses also found that more over half of small and medium sized firms endured “difficulties” accessing the money they required from their bank, the survey carried out every three years, has found.
This 51per cent rate was more than double the number reporting problems in 2007.
Back in 2007 only 5 per cent of all businesses and 21 per cent of those that seek finance reported that they had failed to secure any funds with the remainder either being able to borrow the full amount or some of the amounts they sought.
The survey found the common reasons given by the banks for rejecting applications were lack of security, the particular business sector being too risky, and the current credit climate.
An additional 24pc said they had not been given a reason, suggesting bank pledges to improve customer communications have yet to take effect.
The survey found demand for overdrafts increased last year, with 35pc of firms applying compared with only a quarter in 2007.
The finding prompted one senior banker to warn: “Giving a small business an overdraft is like handing a child a loaded gun.” Instead, he said, invoice discounting was “a highly inexpensive form of finance if used properly”.