Over £1.1 billion has been handed to UK businesses through the Coronavirus Business Interruption Loan Scheme (CBILS), according to new figures.
However, less than a quarter of firms which have formally applied for the loans have secured cash support.
UK Finance said lending through the scheme has grown by £700 million over the past week, an increase of around 150%.
It said 6,020 loans have now been provided to businesses through the programme.
The pace of loan approvals has increased in recent days, rising from 240 loans on April 2 to 910 on April 8, with a further 1,800 loans worth over £300 million recorded over the bank holiday weekend.
Latest figures just published this morning show 6,000 loans under CBILs as of Monday. The scheme is simply not working well enough. We need change now, moving to 100% underwriting for small firms. Businesses cannot afford government to wait any longer.— Ed Miliband (@Ed_Miliband) April 15, 2020
It comes after calls from business groups, such as the British Chamber of Commerce (BCC), for the loan scheme to be accelerated to ensure small and medium-sized businesses can stay afloat.
UK Finance said lenders have received 28,460 formal applications from businesses, meaning that fewer than one in four applications have currently been approved.
However, it is understood that around 300,000 businesses have made inquiries regarding the loan scheme.
Shadow business secretary Ed Miliband said that the scheme “is simply not working well enough” after the figures were revealed.
He added: “We need change now. The Chancellor must move to a 100% guarantee of loans for smaller businesses as other countries have done.
“In this economic emergency, it is the right thing to do.
“Ministers must also accelerate the approval of new financial providers, do more to simplify the application process and provide support for good, future growth businesses not currently in profit. ”
UK Finance stressed that other applications are still being processed and are “expected to be approved over the coming days”.
Lower staffing levels at banks and other lenders mean they have come under significant pressure from increased demand for support from business customers.
Stephen Jones, chief executive of UK Finance, said: “Frontline staff in local branches and call centres are working incredibly hard to help firms access finance as quickly as possible amid unprecedented demand.
“Like all businesses they are working at reduced capacity as many staff are self-isolating or looking after family.”
Chancellor of the Exchequer Rishi Sunak said: “Getting finance to businesses is a key part of our plan to support jobs and the economy during this crisis – and we’re working with lenders to ensure support reaches those in need as soon as physically possible.
“Loan approvals have doubled in a week with more than 6,000 businesses benefiting from over £1.1 billion of loans – and it’s vital we continue this upward trajectory.”
Mike Cherry, national chairman of the Federation of Small Businesses (FSB), said: “This improvement marks a starting point, but while one in five formal CBILS applications are approved, the major banks claim their approval rates for standard commercial loans are many times higher than that.
“These loans are state-backed, so approvals should be higher still. There’s still a lot of work to do.
“Many members tell us it’s difficult to get to the formal application stage – banks are still slow to respond to CBILS enquiries.”