Too much time is wasted during the SFLG application process to determine the eligibility of a business.
SFLG lenders are not currently allowed to seek a personal guarantee from the borrower.
As the SFLG rules stand at the moment, they require "full commitment" from the borrower and there are as many interpretations of that rule as there are bank managers in England and the UK.
FPB member and accountant Khalid Javid slammed the recommendation to limit the SFLG scheme to less established firms.
Mr Javid said: "A client of mine, who has run a fruit and veg shop for 10 years, is presently applying for the SFLG scheme.
The SFLG was introduced to help individuals overcome the problems obtaining the finance to start up new small businesses and also help small businesses expand.
I have asked the Small Business Service to work with the British Bankers' Association, the high street banks and other SFLG lenders to determine how best to successfully implement the recommendations and we will make a further statement later at the time of the Pre-Budget Report in the autumn.
For more than 20 years the SFLG
has been the principal method through which the government assists businesses in securing bank loans.
An ACCA members' survey earlier this year found that 51 per cent of respondents believed the SFLG
to be unsuccessful in meeting its objectives.