THE Bank of England today announced a one-year extension to its Funding for Lending Scheme, in order to make credit more available for smaller firms.
The initiative was initially planned to last nine months but will now end in January 2015 and reduces funding costs for banks and building societies.
However, while there has been an improvement in credit conditions for larger companies, small and medium sized enterprises are still struggling to secure loans, said the Bank.
The Governor of the Bank of England said: "The FLS has contributed to a sharp fall in bank funding costs and an improvement in credit conditions since the middle of last year.
“The changes announced today build on that success by broadening the scope of the scheme and ensuring that it will continue to support the supply of credit, especially to small companies, into 2015.
“I believe such an extension is valuable as it gives banks continued assurance against the risk that market funding rates increase. Today’s announcement is, however, a complement to, not a substitute for, ensuring that our banks are adequately capitalised."