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Government Funding for Lending scheme has "issues", says FSB

By Mblazeby  |  Posted: August 29, 2014

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The Government and Bank of England flagship lending scheme has “issues”, according to the Federation of Small Businesses (FSB).

The Federation was reacting to the news that lending to small and medium sized UK based businesses had fallen by £4 billion across the second quarter, despite Government efforts to increase it through the Funding for Lending scheme

The new figures also included a £3.5 billion decline in lending to large corporations.

Neil Eames, Development Manager for the FSB Wessex Region, said:

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“Small firms are increasingly confident across every sector, but these new Funding for Lending 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.

“While Funding for Lending has had an impact on the price of credit, the trend in lending suggests there remain issues with credit allocation through the banks.

“This is why we believe the Competition and Markets Authority needs to review the market, ensuring that competition is working in the sector and that firms can access the finance they need to grow.

“Alongside the traditional banking market, efforts are needed to scale up and promote alternative finance providers so ambitious firms have other finance options.”

The FLS was launched in 2012 and was designed to motivate banks into lending to smaller businesses by offering them cheap credit in return. 

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