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Rather than simply pursue the mortgage route and fail in a market starved of credit, small businesses are being urged to satisfy their funding needs by taking out a combination of mortgages and asset-backed lending.

"What we want our brokers to do is to tell their clients, 'sweat your assets'," said Nikki Cann, the NACFB's associate director of operations and communications.

Ms Cann's remark comes following a recent announcement by Crystal Mortgages that it has become the only UK firm to offer commercial mortgage lending to near-prime applicants - borrowers with a minor taint on their credit records and thus fall short of banks' lending criteria.

Crystal, a commercial mortgage and bridging finance specialist, has formed a new division, Crystal Commercial Funding, which will target small businesses and offer mortgages in the range of £30,000 to £600,000 with a maximum loan-to-value of 70 per cent.

Roger Dewsbery, senior underwriter for CCF, believes the lender has found a gap in the market it can fill.

Mr Dewsbery said: "Nobody is serving small businesses who fall into the near-prime area, we are in a unique position.

"At present the banks will not deal with anyone who falls in the near-prime market, hence, up until now they have had nowhere to turn other than to sub-prime lenders."

CCF said its product offers greater flexibility by considering applications based on current payment ability over the more traditional serviceability checks which may cause applications to be declined.

"Our basic point is that we will not follow a set of rigid guidelines and make a decision based on hard facts and figures alone. We will try to understand the nature of the client and their requirements."

With standard commercial mortgages typically priced four percentage points over base rate and sub-prime mortgages at circa 15 per cent, CCF's rates will fall in between.

Although Mr Dewsbery is confident his product will attract huge demand, the NACFB are less certain if this will help ease the dearth of financing for small businesses.

Small businesses have been left out in the cold, with many having to shutter operations due to cuts in credit lines. Large banks such as HSBC have closed its doors to brokers for small business loans.

"I'm not sure if this is what the market needs. What we want is the high street lenders to take their foot off the brake a little," Ms Cann said, although she agreed that there were not many lenders in the non-prime market.

Still, NACFB members will continue to look at balance sheets as a whole when advising clients.

"Commercial mortgages can be a very unwieldy method of finance," Ms Cann said.