by business editor Trevor Sturgess

The smallest firms are still more likely to get a rough deal from banks despite claims that most loan requests are approved.

That's the reaction of the Federation of Small Businesses in Kent and Medway to an independent survey of finance for small and medium enterprises (SMEs) carried out for the British Bankers Association (BBA).

It found that while the majority of applications were accepted, start-ups and businesses with up to nine members of staff were most likely to be initially refused finance.

More than half - 55 per cent - had not applied for a loan in the last 12 months because they expected to be turned down.

Fifty-two per cent of firms with up to 249 employees, said that applying for a loan was too much hassle.

Roger House, chairman of FSB Kent and Medway, said: "The picture that emerges from this independent research shows that the smallest SMEs are losing out - with a third being refused outright when initially applying for new finance."

These firms were missing ot on growth and investment opportunities and were at a competitive disadvantage.

"This will have a much wider impact on the economy as small firms make up more than half of UK GDP."

The CBI said banks needed to "work hard to build stronger relationships with their smaller business customers".

The British Bankers' Association said the results were encouraging but it would address concerns about the application process.

Banks were committed to providing SMEs with "greater and easier" access to finance.