Banks are still giving businesses a hard time when it comes to lending.

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People looking to set up a recruitment agency may be concerned to hear that, despite a fall in decline rates, businesses are still having difficulty accessing finance from their banks.

That is according to new research from the Institute of Directors (IoD), which found that banks refused to lend to one in three firms that applied for finance during the first half of 2010.

According to the IoD, the increasing amount of security requested by banks is an indication that lending conditions have become more restrictive.

Commenting on the stringent criteria, Miles Templeman, director-general of the IoD, said: "This raises a question about the functioning of the government's Enterprise Finance Guarantee scheme.

He went on to state that the organisation would the government to "clarify the relationship between the state-backed guarantee scheme and bank requirements for personal security".

The reports comes mid the British Bankers' Association's publication of a factsheet outlining in detail the process of how banks calculate interest rates.