Business secretary Vince Cable told MPs that many bosses at such companies are dissuaded from applying for such loans, despite high-street banks claiming that they accept around eight in ten of all applications from small and medium-sized enterprises.
Speaking to the Business, Innovation and Skills Committee, Mr Cable noted a lot of demand is discouraged.
He explained: "People ask a preliminary question at their local branch and they are discouraged from applying. And that is a real phenomenon."
Indeed, the Federation of Small Businesses observed that many of its members are simply too frightened to apply.
Earlier in the month, chief secretary to the Treasury Danny Alexander claimed banks in the UK need to start lending more to provide Scottish companies with the financial assistance they require - adding it is deeply troubling that this has not already been forthcoming, the Press Association reported.
By Claire Archer