Bank lending to small and medium-sized businesses in the first nine months of the year has fallen short of targets agreed under the Government’s Project Merlin deal. Although figures released today by the Bank of England show that the UK's biggest four banks increased their lending to companies in the third quarter of 2011, lending to small and medium-sized firms fell to £18.8bn from £20.5bn between April and June. It takes total small business lending for this year to £56.1bn - falling short of the nine-month target of £57bn. The banks said that there is weak demand from business for loans. In total, there was £57.4bn of new loans granted for all companies from July to September, up from £53bn in the second quarter, the Bank of England said today Under the Project Merlin agreement, the big four banks have pledged to lend at least £190bn to firms this year.