LENDING to non-financial businesses by the big UK banks rose by a net £1.1 billion in January - the first increase since last August - industry figures have revealed.

This rise followed a net fall of £2.6bn in December.

The British Bankers' Association (BBA), publishing its latest monthly lending figures yesterday, said that the net rise in lending to non-financial businesses in the UK had been driven by higher borrowing by the retail trade, professional services firms, and construction companies.

According to the BBA, lending to non-financial businesses fell by £1.8bn in both September and October last year, and by £2.4bn in November.

Attempting to explain the general weakness of bank lending to businesses in recent times, the BBA said that larger companies had "notably" been making use of capital markets to raise finance in preference to debt finance, while the real estate sector had been actively reducing its bank borrowings.

In their latest monthly summary, published last week, the Bank of England's agents around the UK noted that corporate credit availability had increased slightly over recent months.

However, they highlighted a continuing "disparity" between the experiences of large and some smaller firms, adding: "Bank lending conditions had remained tighter than pre-crisis for many small and medium-sized companies, but were improving: some stronger businesses described conditions now as reasonably good. However, a distrust of banks among smaller companies had continued to bear down on their demand for bank credit."

Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "There are signs that underlying bank lending to businesses is improving overall."

He added: "Hopefully, the latest BBA data are a sign that banks are becoming more prepared to lend to businesses as the economy sustains healthy growth and the outlook seems decent."

However, he highlighted the Bank of England agents' comments about the disparity between credit conditions for larger and some smaller firms.

Mr Archer added: "It is vitally important for the UK's ability to generate balanced growth and lift productivity that all companies who are in decent shape and who do want to borrow, whether it be [to] add or upgrade capacity, improve production processes, explore new markets or generally support their operations, can do so, and at a non-punishing interest rate. This applies to all companies, whatever their size."