Bank of England Says SME Lending is Up
The latest Money and Credit statistical release from the Bank of England shows that lending to small businesses appears to be on the increase.
Figures released by the Bank of England (BoE) yesterday indicate that lending to the small business sector increased between May and June this year.
The amount of additional funds lent to small businesses amounts to £238 million and is the biggest increase in lending since the BoE records of lending to SMEs begain in 2011.
Compared to this time last year, lending is still down by around 3%.
The Government’s Funding for Lending Scheme (FLS), criticised earlier in the year, may have something to do with the latest upturn.
Economists have said that the FLS may be starting to have a more "positive impact" than previously.
FLS figures for the last quarter of 2012 showed that lenders were not passing on the benefits of cheap loans to small businesses and the Business Minister Vince Cable admitted that the scheme may need some "adjusting".
The Funding for Lending Scheme was also extended beyond its end date of January 2014 with Chancellor George Osborne taking the end date to 2015 instead.
In April, after saying FLS needed some "adjustment" the scheme was then "heavily skewed towards SMEs" with the promise that for every £1 lent to SMEs the banks could borrow £5 in 2014.
Furthermore, to encourage the banks to lend sooner, there was a carrot dangled infront of the participating banks that for every £1 they lent to small and medium-sized businesses in 2013, they would be able to draw £10 from the FLS.