THE West Midlands’ head of a financial services firm is calling for the Government to review the channels through which funding is available to help increase small business lending.

Following the news that RBS is to launch a review of its lending to businesses after uncovering £20 billion in untapped cash, Sharon Wiltshire, West Midlands managing director at specialist funding provider Bibby Financial Services, warns that schemes such as Funding for Lending are not set up to enable alternative providers to access the funds, which threatens to suffocate growth in the region in 2013.

Bibby Financial Services, which provided £39.6 million to SMEs in the West Midlands last year, has approached the Government and Bank of England, asking for a review of how the schemes operate.

The aim is to enable non-bank lenders, such as Bibby Financial Services, to compete on a level playing field with the banks and increase funding to businesses.

Mrs Wiltshire said: “The news that RBS has an abundance of cash comes as no real surprise, as the banks are extremely risk averse and too often decline funding applications.

“As a result, Government lending channelled through banks has not been reaching as many businesses in the West Midlands, as the banks are only lending to those at the safer end of the spectrum but these aren’t necessarily the businesses that require funding the most, so there is an element of cherry-picking going on.”

The call for a review comes following a study carried out by the invoice finance provider among SME managers and directors in the West Midlands during the second quarter of this year.

The study found that despite the Government’s hopes to see the green shoots of economic recovery this year, many businesses are still concerned with the issue of funding.

More than a quarter - 26 per cent - say increased access to funding would help them to realise their business aspirations.

Mrs Wiltshire added: “Our Q2 research suggests that West Midlands SMEs see access to funding as an important driver for their business aspirations and we want to help them with this, which is why we feel a more wide-ranging review of the funding system is so vital for moving forward with growth.”