Loans to the euro zone's private sector contracted for the 12th month in a row in April, raising pressure on the European Central Bank to take fresh policy action to help lift the bloc out of recession.
Loans fell 0.9 percent from the same month a year ago, ECB data showed on Wednesday, a slightly bigger fall than the mid-range forecast for a drop of 0.7 percent in a Reuters poll of economists.
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The ECB, which meets next week, has flooded banks with money but many still remain wary of lending to businesses - particuarly in the recessionary periphery of the euro zone - against a weak economic backdrop and uncertain outlook.
Banks granted non-financial firms 18 billion euros less in loans in April than in the previous month, data adjusted for sales and securitisations showed, after a fall of 2 billion euros in March.
"The marked fall in lending to euro zone businesses in April ramps up pressure on the ECB to come up with concrete measures aimed at improving credit availability to companies, especially small and medium-sized ones," said Howard Archer, economist at Global Insight.
ECB data also showed that loan growth rates vary greatly between euro zone countries, with those hardest-hit by the debt crisis seeing big reductions.
In Spain, lending to firms, excluding banks, fell 8.8 percent from the same month a year earlier. Ireland saw a 5.6 percent decrease, while lending fell 3.3 percent in Greece and 3.5 percent in Portugal.
German lending growth to firms was just above zero, as it recorded a 0.3 percent annual growth rate. Growth in the Netherlands, Finland and France was faster than that.
The ECB holds its June policy meeting next Thursday. Last month, it cut its main interest rate to a record low of 0.5 percent and policymakers have left open the possibility of a further cut.
In addition to potentially cutting the main rate, the ECB's Governing Council is debating whether to cut the deposit rate - the interest paid on money that commercial banks park at the central bank - below zero to encourage them to lend more. Critics say such a move could destabilise money markets.
To boost lending to small euro zone companies, the ECB is also looking at ways to revive an asset class that was widely criticised for its role in the financial crisis - asset-backed securities (ABS).
These allow banks to move at least some credit risk off their balance sheets by packaging individual loans into new instruments and selling them on to other investors.
Credit markets were paralysed during the crisis when such securities became toxic due to the default of housing loans that underpinned them.
But the ECB is now considering whether such securities could help the euro zone's small- and medium-sized enterprises (SMEs), the bloc's economic backbone, saying that not all ABS are bad.
Euro zone M3 money supply - a more general measure of cash in the economy - grew at an annual pace of 3.2 percent in April, accelerating from 2.6 percent in March and above the consensus of 2.9 percent from analysts polled by Reuters.
David Brown at New View Economics said that despite the rise, the money supply figures remained weak, adding that they do "not let the ECB off the hook for further policy easing". (Reporting by Paul Carrel and Sakari Suoninen; Editing by Jeremy Gaunt)