The difference between money being lent to small and medium businesses and demand for loans equates to £4.3 billion, according to a Crowdfunder.

Crowdfunding business Money&Co says the shortfall is costing the UK economy dear by preventing economic growth and stunting entrepreneurship.

Its study, involving 301 businesses and carried out by Populus, asked managers at SMEs about their last loan application, whether it was granted and if so whether the loan value was met.

For businesses with 10-to-49 employees the average funding gap was £11,752 per business, while for businesses with 50-to-249 staff the gap was just shy of £70,000 per business.

Despite a perceived lack of trust in high street banks after the Credit Crunch and recession of recent years, 72 per cent of respondents said they would still approach a bank first if they needed a loan.

Money&Co chief execuitve Nicola Horlick said:" This research clearly shows that the banks are not providing UK SMEs with the finance they need. Although recent figures indicate that the UK economy is recovering, we cannot ignore a funding gap of such magnitude.

“Crowdfunding provides a great opportunity to both credit-worthy businesses and investors, offering them something they aren't getting elsewhere.”