Business Secretary Vince Cable says he wants a "significant improvement" after data showed UK banks are behind track in their lending to smaller firms.
Bank of England figures show that in the first three months of 2011, the top five UK banks loaned £16.8bn to small and medium-sized (SMEs) companies.
Under a deal with the government, the banks had agreed to lend £76bn to SMEs in 2011 - equating to £19bn a quarter.
The banks said that the latest data demonstrated a "determination" to lend.
However, Mr Cable pledged to examine "further action" if bank lending did not rise.
Under a deal called Project Merlin, Barclays, Royal Bank of Scotland, Lloyds, HSBC and Santander promised to lend £190bn to businesses in 2011.
Of the £190bn, some £76bn of credit should be made available to SMEs this year, about £19bn every three months.
But the de facto shortfall in the first quarter of 2011 was about 12%.
However, gross lending to all companies in the quarter was £47.3bn, which means that the banks are on course to meet their overall target of £190bn.
In a statement, the Merlin banks pointed out that these were still early days for the agreement.
However, many small firms report that a bank credit remains hard to obtain, with viable companies under threat because they cannot get loans.
Mr Cable agreed that just one quarter's figures were not conclusive, but said: "There is a serious problem with lending to good, small companies.
"We looked to the Merlin agreement to rectify the problem and... we want to see significant improvement over the next few months.
"We will monitor the banks' performance extremely closely and if they fail to meet the commitments they have agreed we will examine options for further action," the business secretary said.
The Merlin deal was finally thrashed out in February, after a protracted and difficult series of negotiations between ministers and banks over the lenders' role following the financial crisis.
The agreement did not just cover bank lending, but also a reduction in bank bonuses and a promise by the banks to be more transparent about their pay packages.
The British Bankers' Association has repeatedly said that its members are doing all they can to increase lending.
A spokesman for the Merlin banks said: "These numbers demonstrate the determination of the Merlin banks to lend to viable businesses - it has been a solid start to the year.
"Whilst these numbers are encouraging, it is too early to draw conclusions as to the year-end outcome."
He added that demand for loans by small businesses had been "muted".
But the British Chambers of Commerce (BCC) called the figures "disappointing" and said the "crisis of confidence" between banks and businesses continued.
BCC director general David Frost said: "Many companies complain about strained relationships with banks both during and after the recession.
"Over-centralised processes, unclear decision-making and a lack of proper, local relationship management from banks, mean that in many cases, business customers have been put off applying for finance," he said.
John Morgan, chief executive of Object Matrix, a software company based in Caerphilly, south Wales, told the BBC that his bank had recently turned down a vital overdraft request.
"I would say that the lack of funding from the banks is definitely holding us back from expanding," Mr Morgan said.
"When you cannot even get an overdraft facility to fulfil a firm order, you are in a ridiculous situation."
The Federation of Small Businesses said that a recent survey showed that widespread problems remained.
John Walker, FSB national chairman, said: "It is not surprising that the banks have not met lending targets to small firms.
"A recent survey of members of the FSB found that only 16% had approached the bank for credit and of those 44% had been refused," he said.
Shadow chancellor Ed Balls said the new Merlin data was "disappointing", telling the Communication Workers Union's annual conference that he had warned the agreement would be "weak and toothless".
He said: "Just at the time when we need small and medium-sized businesses to grow so we can get our economy moving again, it is worrying that bank lending to small businesses is falling short.
"It is early days, but three months on the signs are that the Project Merlin plan is not working."
But Downing Street said the lending agreement was for a year, and it expected banks to keep to their commitments.
The Prime Minister's official spokesman said: "Bank lending will move around during the year, clearly it will in part reflect demand.
"The purpose of these bank lending agreements was to ensure that there was sufficient supply of lending for families and for businesses and they were based on an assessment of what we thought would be required by the economy this year.
"We expect them to keep to those commitments over the course of the year," the spokesman said.