Alistair Darling and Lord Mandelson meet bank chiefs today to push for greater lending to small businesses.

The chancellor and the new business secretary are calling on the banks to ease restrictions lending to small business, which have reported higher loan and overdraft rates.

Part of the government’s bailout plan for Royal Bank of Scotland and Lloyds TSB/HBOS was for the banks to return lending availability to 2007 levels. Other banks not taking the government support are to be pushed to increase lending.

After the meeting Lord Mandelson said: “I think there is a willingness on the side of banks to make sure we get through these difficult times.

“Banks don’t want to pull the plug on small businesses – but at the same time they are facing difficult conditions.”

He added the government had a role to play making the banks lend more – and there remained issues they needed to “thrash out”.

A Treasury spokesperson today as a routine part of regular meetings between the government and the banks, meetings which have now been stepped up

Angela Knight, British Bankers’ Association (BBA) chief executive, said: “The UK banking industry has always been and remains a strong supporter of small businesses.

“We have to be clear that as talk turns to recession it seems inevitable that some businesses will not survive, even with the best assistance that banks, government and voluntary agencies can give them.

“The businesses that will succeed through this downturn are those currently reviewing their business plans and engaging with their banks to prepare for a slump.”

Earlier this week the government announced a series of measures to aid small businesses including committing itself to pay firms within ten days and free business health checks.

Responding to the changes, Conservative shadow skills minister David Willetts said: “At a time when businesses are worrying about their cash flow, homeowners are worrying about their mortgages, and people are worrying about their jobs, they expect the government to be on their side.

“But instead of offering real help, Labour ministers have returned to their bad old ways, spinning and reannouncing old policies to get a headline.

“Instead of spinning non-announcements, the government should be doing everything it can to help small businesses so that jobs are not lost.”