SCOTTISH business leaders have called for the remit of the Scottish Investment Bank (SIB) to be widened, to help far more companies than those export-led, high-growth businesses that it is targeting as the economic situation deteriorates.

They are concerned that the flagship Scottish Government initiative to help small and medium sized enterprises raise cash is doing nothing for the vast majority of firms during a challenging period for businesses.

The slowdown in the economy has added fresh urgency to complaints that SMEs are being hit hardest by the shortage of bank funding resulting from lenders’ efforts to rebuild their balance sheets.

However, the SIB is concentrating on a narrow band of firms in sectors such as life sciences and renewable energy that are reckoned to be capable of achieving rapid growth.

Critics complain that established businesses in other sectors are excluded, although these provide the bulk of private sector jobs in Scotland.

Liz Cameron, chief executive of Scottish Chambers of Commerce said: “We need to stop artificial barriers or restrictions being placed as to which sectors can apply,” said.

“Construction, infrastructure developments, retailing, tourism, general business operations – they all collectively employ millions of individuals and need to be sustained to enable them to work through the economic conditions. They cannot do this if they do not have cash.”

She said the SIB should develop a new fund to provide short-term working capital for firms with private sector support.

Colin Borland, head of external affairs for the Federation of Small Businesses in Scotland, said: “They (the SIB) are of limited relevance to our members.”

He added: “These times are fairly unusual. You can’t take it as read that the business base will always exist.

“We should be looking at ways of expanding and supporting it.”

He said the SIB should help more businesses but ministers must maintain the pressure on banks to increase lending.

CBI Scotland was in a minority in supporting SIB’s narrow sector focus.

David Lonsdale, assistant director of CBI Scotland, said: “You should put money where you will get the biggest bang for your bucks.

“If that means focusing on a relatively modest number with the potential to offer a step change in economic benefit that’s the approach we should take.”

But the demands for reform will refocus attention on an institution that has attracted controversy.

Following calls by trades unionists for ministers to create an investment bank to support manufacturing in Scotland, First Minister Alex Salmond announced plans to start one at the STUC’s conference in 2009.

He said the bank would support innovative firms through three schemes developed by Scottish Enterprise worth £130 million and £20m of new money. This sparked fears that the bank would mainly recycle existing money.

More than two and a half years later the SIB is mainly concerned with administering around £150m of assets in the three SE schemes that it inherited. The SIB launched a £55m loan fund (with £22m of European funding) in February, which has made one award to date.

Asked what the bank had achieved and how it might be developed, a Scottish Government spokesperson said: “The Scottish Investment Bank and the Scottish Loan Fund is just one of the practical actions that this Government and Scottish Enterprise are taking forward to accelerate economic growth through improving access to finance.

“Improving financial understanding and financial readiness of SMEs is also a key component of improving access to finance and our enterprise agencies are working with Business Gateway and the banks to directly support companies to improve their performance in this area.

“It is important that access to finance does not hamper the ambitions of businesses that have strong potential for growth.”