Funding for Lending Q3 Figures Released

The Bank of England has released the latest Q3 data for the Funding for Lending Scheme.

The latest data for the Funding for Lending Scheme (FLS) shows lending through the scheme until the end of September 2013.

Twenty one participants in FLS drew down a total of £5.5 billion with net lending amounting to £5.8 billion.

The news comes just a few days after the announcement by the Bank of England and HM Treasury that FLS would be scaled back to target funding for small businesses, cutting off the supply of cheap government credit to lenders for consumer mortgages.

Under the recent Help to Buy scheme, which allows buyers to put down 5% on a property with the rest of the deposit underwritten by the Government, the housing market has been seen to pick up.

FLS has been criticised in the past for focusing too much on the housing market to drive the economy and despite the latest focus on SMEs, business groups have continued to criticise the scheme.

Howard Sears of small business investment firm Astuta recognised the scheme had been good for private borrowers but for small firms he branded FLS as an "abject failure".

“Almost all SMEs, especially smaller ones, will know first hand exactly how subdued credit supply is.”

“With the property market back on its feet, consumers are feeling confident and yet a vast number of the SMEs that pay their wages are still in a credit limbo, and are unable to grow as they might in a normal lending environment.”

Sears continued:

“For the economic recovery to be genuinely sustainable, the engine room of the economy, namely its SMEs, need to function but many remain starved of the credit they need to grow.”

Matthew Fell, The CBI’s Director for Competitive Markets, added:

“Despite overall FLS lending substantially increasing, Bank of England data shows that net lending to SMEs continues to fall so the recent move recalibrating the scheme towards business lending is welcome.”

“But FLS isn’t the only tool to help plug the finance gap for smaller firms. We want the Government to kick-start a market in securitisation of SME loans.”

The Funding for Lending Scheme will end for mortgages in January 2014 and will continue only to provide cheap credit to lenders for the SME market until January 2015.

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