Small and medium-sized businesses that have their applications for loans rejected will be able to appeal to more senior bank managers under proposals from Lord Mandelson.

The Business Secretary is worried that smaller businesses are being deprived of capital because lenders are trying to rebuild their balance sheets instead of passing on state-backed funds to corporate Britain.

His comments come days after the Bank of England warned that commercial lending had shrunk by £6.5 billion in January, almost double the decline experienced in December. Corporate lending is now at its lowest for almost a year, despite the billions of state funds committed to help lenders and credit commitments.

At a Federation of Small Business conference in Aberdeen yesterday, Lord Mandelson said: “What I want to do is raise that with the banks and find a better means of doing so to enable small businesses, in a sense, to appeal over the heads of their local managers and area directors, go to a central point in the banks and say: ‘Look, I’ve been a long-standing customer of yours and I don’t expect to be treated in this way.’

“We’ve got to be, I think, much tougher on that.” Much of the business community is angry that banks, including those controlled by the State, are hoarding capital rather than helping smaller firms to grow.

RBS and Lloyds Banking Group, both of which are controlled by the Government, sparked fury when they admitted that they had failed to fulfil lending commitments undertaken last year. Both banks fell short of meeting the £27 billion lending commitments and blamed a lack of appetite for loans among creditworthy firms.

Lord Mandelson told the federation that the Government was examining how to replace the Enterprise Finance Guarantee scheme after 2011. This guarantees loans to small and medium-sized businesses by a number of banks.

He also announced a £2.5 billion investment from Total, the French oil group, to build a huge gas platform in the North Sea. The Treasury had offered tax incentives to secure the deal.