UK banks lend £700m to small businesses using government's funding for lending scheme

 
Chris Papadopoullos
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The funding for lending scheme is helping small businesses (Source: Getty)

​UK banks lent £700m to small businesses between July and September using the government’s funding for lending scheme (FLS), new figures from the Bank of England showed yesterday.

The FLS, which was launched in 2012 to incentivise extra lending, was extended by two years to 2018 this week.

Lending to small firms contracted in 2014, leading to criticism of FLS, which has since been re-targeted to encourage bank lending to small firms. Lending to small businesses has climbed throughout this year.

“We welcomed the FLS extension announced last week and the latest figures show that banks are helping SMEs to drive economic growth and create jobs,” said a spokesperson for the British Bankers’ Association.

“Lenders are using FLS to lower borrowing costs for businesses and offering a range of competitive deals at a time when interest rates are at a record low.”

Lloyds Bank also welcomed the figures. Gareth Oakley, managing director of SME banking at Lloyds Banking Group, said:

In the first nine months of 2015, we have grown our SME lending by more than £1.2bn, more than any other bank participating in the funding for lending scheme.

The government's announcement to extend FLS beyond January 2016 will be welcome news for UK SMEs. Although the economy has strengthened since the launch of FLS just over three years ago, we have seen first-hand how successful it has been in providing businesses with cheaper finance and the confidence to invest for the future.”