Small businesses desperate for loans are at the mercy of dozens of unscrupulous new lenders, it has been claimed, and there are no rules in place to protect them from being taken for a ride.

A financial trade body has warned that it has rejected 40 new lenders over the past two years who were seeking to access its nationwide salesforce of brokers advising small firms on finance. Over the previous two-year period, just five lenders were turned down.

The rejected small business lenders either charged sky-high interest rates, or were unwilling to reveal their source of capital, the National Association of Commercial Finance Brokers (NACFB) said. Some also failed to prove a track record.

The trade body has 1,600 brokers on its books, selling small business finance products from 142 lenders.