China said Wednesday it will make it easier for smaller businesses to get bank credit, amid growing concern at the number of cash-strapped companies turning to private lenders for financing.

Independent business owners in China have long complained that banks ignore their loan applications, preferring to lend to large state-controlled enterprises whose debts are implicitly guaranteed by the government.

A growing number of private companies are resorting to the informal lending market where they pay as much as 70 percent interest on loans -- more than 10 times the bank rate.

The issue has gained prominence recently after at least one entrepreneur killed himself and dozens of others disappeared in the eastern city of Wenzhou after borrowing money from private lenders at very high interest rates.

Chinese Premier Wen Jiabao last week visited Wenzhou -- which gained nationwide fame in the 1980s for its free-wheeling entrepreneurs -- and urged stronger financial support for smaller businesses.

The package of measures announced by the State Council, or cabinet, on Wednesday was intended to increase credit support, broaden financing channels and offer tax breaks for small enterprises, according to a statement.

The State Council also pledged to lower the deposit reserve ratio for small financial institutions which would -- in theory -- free up more money for them to lend to private companies.

Tighter lending restrictions introduced in the past 12 months to stem a flood of liquidity in the economy and rein in inflation were also exacerbating the problem faced by small companies, Credit Suisse warned recently.

It estimated that the informal lending market could be worth four trillion yuan (about $629 billion) and growing 50 percent year-on-year, so that it "threatened financial stability" in China.