The Bank of
Net lending by banks involved in the scheme fell by £3.5bn between April and June, bigger than the £2.7bn drop in the first quarter. Lending to small and medium-sized enterprises (SMEs) fell by £435m, compared with a £719m fall in the first quarter according to the Bank's latest figures.
Under the FLS, banks can draw £5 for every £1 of net lending to SMEs. The hope at
"Today's figures show that despite scheme after scheme and promise after promise from ministers, profitable and successful businesses still can't get access to the finance they need to start up and grow, which is acting as a brake on our economic progress."
Of the 36 banks participating in the scheme, net lending to SMEs was either flat or down among 24 banks. The biggest fall was at Nationwide, where net lending to SMEs was down by £501m in the second quarter, followed by Clydesdale, where lending fell by £439m, and bailed-out RBS, where lending to SMEs was down £360m.
On the flipside, state-backed
"The real test for the scheme has always been whether it is able to get credit flowing to young and fast-growing businesses. Unfortunately many of these firms remain frozen out when it comes to accessing the finance they need to fulfil their potential.
"These figures reiterate that much more needs to be done to fill major gaps in the provision of SME finance in the
In November last year, Bank of
The scheme was originally launched in
The Bank said on Thursday: "Some of the weakness in bank lending to smaller businesses, which has persisted despite the fall in bank funding costs, may reflect weaker demand. The FLS extension will continue to support lending to SMEs in [the second half of] 2014."
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