BRITAIN'S premier banking organisation has urged honesty after it emerged the pair behind the Scots craft beer company Brewdog admitted they lied to a band to get investment for their massive expansion.

James Watt and Martin Dickie, who set up the Aberdeenshire-based brewery back in 2007, admitted they had to lie to HSBC to obtain a second bank loan for £150,000 to install bottling equipment and expand production in 2008.

Mr Watt said: We said that our bank had offered us an amazing deal, but that if you can match it we'll switch, and they went for it... You have got to do what you have to do."

The British Bankers' Association (BBA) urged those in a similar situation to use an independent appeals process introduced three-and-a-half years ago.

In June it emerged that small and medium business turned down for bank funding secured about £42 million through the process in three years.

A BBA spokesman said: "I don't think it would be fair for a banking trade association to encourage people to lie.

"Bank lending is not always right for every business at every point and we do a lot of work trying to make people running businesses realise that there are other types of finances, other places you can go to get business funding, be it, like trying to encourage someone to take equity in your business.

"What we do have, that we think is a better way to go, is the independent appeals process that the banks have been running.

"Of course, when this (the HSBC) lending decision was made seven years ago that was before the appeals process was in place.

Steve Gracey of HSBC would not comment on the rights and wrong of what happened but said: "Brewdog is an ambitious business and we are delighted that they have experienced several years of growth and job creation with HSBC support."

Brewdog said the funding was needed after just a year of "selling a couple of cases on a good day and losing money" according to Mr Watt, which meant the failed to meet repayments for an initial £20,000 loan they secured to set up the company.