The statement came in a House of Commons business, education and skills committee in which Cable was questioned on the government’s growth plan.
Cable said: “In terms of access to finance there is a serious problem and that is confirmed to me every time I meet business people around the country.”
He added: “We can’t allow banks, particularly those reliant on the taxpayer, to prevent growth in the real economy.”
Business lending as a whole made a net contraction of. £2bn in the first quarter of 2011.
Under Project Merlin the five biggest banks agreed to increase gross business lending to a total of £190bn for 2011.
It has been argued that some firms are trying to balance their own accounts with cuts rather than increasing their debt levels and that this has put downward pressure on demand for credit.
Cable believes that this has more to do with banks putting off applicants in the initial stages of consultation.
He said: “A lot of demand is discouraged, people ask a preliminary question at their local bank and they’re discouraged from applying. That is a real phenomenon.”
Cable did not go into specifics with regards to what can be done should Project Merlin targets not be met, of the current measures he simply said: “If they don’t work we will have to try others.”