Banklending to small businesses picked up at last in the first quarter, Bank of England figures showed yesterday.
Net lending to small- and medium-sized enterprises (SMEs) rose by £615m in the first quarter of 2015.
It marks a sharp reversal after years of decline – in the final quarter of 2014, net lending to SMEs fell by £811m.
The biggest contributor in the first quarter was Lloyds Banking Group, which increased net lending to SMEs by £425m in the three-month period.
The next biggest rise came from challenger bank Aldermore, at £132m.
RBS and Shawbrook Bank added a net £107m each to small business lending.
Meanwhile Arbuthnot Latham increased net loans to small businesses by £71m in the quarter.
The Bank of England’s figures look at lending by banks which are signed up to its Funding for Lending Scheme (FLS), which gives institutions access to more cheap funding as they increase lending levels.
The aim of the scheme is to encourage lending to firms, and particularly to make sure those loans are affordable.
“We have seen how successful FLS has been in helping small businesses grow with competitively priced funding, helping us to increase our SME net lending by over 20 per cent since the start of 2011 while the market reduced by 15 per cent,” said Tim Hinton from Lloyds Banking Group.
“We remain committed to participating in FLS, enabling more small and medium-sized businesses to grow and help Britain prosper.”
And Aldermore also praised the scheme for helping it to increase lending levels.
“We know how important SMEs are to the continuing economic recovery and it is imperative that banks focus on providing flexible finance for SMEs, as well as wider support in the form of good customer service,” said its chief executive Phillip Monks.
“We pride ourselves on listening to our SME customers and giving them the support to focus on their business.”
Banks drew down £3.1bn of funding from the FLS in the first quarter. Increased lending over the period also entitled the banks to draw down an extra £4.9bn, as the offer of more funding is tied to banks raising lending volumes.
The biggest draw down came from the Yorkshire Building Society, which took £1.15bn, followed by the Coventry which took £725m.