The news prompted one prominent banker to warn that lack of bank finance is pushing small businesses into riskier forms of credit.
Both large and small companies experienced a fall in bank lending over the period,the Bank of England said.
While gross lending remained largely flat over the first two quarters of 2013, companies stepped up repayments.
Ian Henderson, the Scot who runs challenger Shawbrook Bank, said: "We are still seeing significant demand from credit-worthy small businesses who are struggling to secure credit from the high street, despite being in a strong position to grow.
"There is also a worrying knock-on effect of the continued shortage of bank credit to SMEs - many small businesses now assume they are un-bankable and are turning straight to riskier or more expensive forms of credit to fund their growth."
The Bank of England's FLS was launched last year and was intended to boost the economy by incentivising banks with cheap funding if they handed out more loans.
But Howard Archer, chief UK and European economist at IHS Global Insight, said: "The FLS has to date had limited impact in supporting bank lending to companies.
"At best, it appears that FLS may have stopped lending to businesses from falling more than it has."