Business lending remains in the doldrums despite the economic recovery after the Bank of
In a blow for the scheme, which is designed to give companies greater access to the finance they need to expand, net lending by banks involved in the programme fell to minus pounds 3.9bn between April and June, dropping below the -pounds 2.7bn in the first quarter. Net lending to small and medium-sized enterprises (SMEs) was -pounds 435m, compared with -pounds 719m in the first quarter according to the Bank's latest figures.
Under the FLS, banks can access cheap loans on the condition they lend to businesses. They can borrow pounds 5 from the Bank for every pounds 1 of net lending to SMEs. The hope at
Of the 36 banks participating in the scheme, net lending to SMEs was either flat or worse among 24 banks. The worst figure was at Nationwide, where net lending to SMEs was -pounds 501m in the second quarter, followed by Clydesdale, where net lending was -pounds 439m, and bailed-out RBS, where lending to SMEs was -pounds 360m.
On the positive side, state-backed
"Through our participation in FLS we continue to offer 1% discounts on loans to all our SME customers, and that is helping us continue to grow our lending to the sector, by 5% a year, net, at a time when SME lending across the banking industry is still falling," he said.
"These figures reiterate that much more needs to be done to fill major gaps in the provision of SME finance in the
In November, Bank of
The scheme was launched in
The Bank said yesterday: "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."
"Funding for Lending is failing to help the thousands of British businesses that need finance but can't access it," he said.
"It is time to accept that these types of support facilities, using banks as the primary distribution channel, are no longer the answer.
"Alternative sources of finance, like peer-to-peer lending, are proving a better way for the government to get finance through to hard-working businesses. Together we're creating a more diverse and fairer financial system which is better for both businesses and investors."
Shadow business secretary
Hispanic #1 Breaking News for Entrepreneurs, Professionals and Small Business Owners - HispanicBusiness.com
OCTOBER 30, 2014
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