New figures suggest that small and medium businesses turned down for bank funding in the last three years have collectively secured £42 million through an independent appeals process.

The process allows businesses with turnovers under £25 million to appeal rejected loan applications or to fight for better lending terms.

In a report published today, professor Russell Griggs, who is the official independent reviewer for the process, said 3,518 appeals were lodged this year alone with about a third overturning original decisions.

Talking about banking relationships, he said: “I have come to the conclusion that if we want a better relationship between lenders and SME customers then lenders need to know more specifically why their lending application failed.

He added: “All lenders need to put their systems in a place where they can be open and honest on the reasons for failing a lending application.”