News Column

Banks still fail to lend more to small businesses

August 29, 2014


THE FUNDING for Lending (FLS) scheme is still failing to increase loans to smaller firms, according to figures released yesterday by the Bank of England.

The banks participating in the scheme drew down 3.2bn between April and June, despite the fact that overall credit to small- and mediumsized enterprises (SMEs) was still on a declining path. During the second quarter, net lending to small businesses declined by 0.4bn.

The figures come despite a specific effort to retool the scheme. In November 2013, Bank of England governor Mark Carney trimmed the FLS scheme so it could no longer apply to mortgage lending, judging that the measure was unnecessary in a then increasingly heated market.

Loans to households were finally scrapped at the end of January.

"Small firms are increasingly confident across every sector, and in every region. But these new FLS figures again show that growth ambitions are not being translated into demand for finance, especially for smaller businesses that have not been able to capitalise on cheaper credit," said John Allan of the Federation of Small Businesses.

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Source: City A.M. (UK)

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