Once again, as the government announces an extension to the Funding for Lending scheme for SMEs the latest results underline the paucity of monies lent to date.
The Bank of England reported that in the three months to September 2014 lending under the scheme had fallen by £100m.
The scheme, launched in 2012, fell by £128m in the third quarter following an even bigger £435m fall between April and June.
State backed Lloyds Banking Group, was the top lender over the period with £304m followed by Santander at £107m.
A Lloyds Banking Group spokesman said:
“The Bank of England’s latest figures show that, during the nine months until September 2014, Lloyds Banking Group’s SME net lending growth was £1.2 billion, which is more than any other bank participating in the Funding for Lending Scheme.”
In announcing the extension the Treasury said:
“The FLS extension will complement various other longer-term initiatives to improve the availability of credit to SMEs as they take root.
“These include: the British Business Bank’s various programmes to make markets work better for SMEs; the joint Bank of England-ECB initiative to improve the functioning of the securitisation markets, including securitisation of SME loans; the government’s proposals in the Small Business, Enterprise and Employment Bill to mandate greater sharing of SME credit information and to require banks to share details of SMEs which have been declined finance; the Bank of England’s consideration of widening access to credit data to support the provision of credit to SMEs through non-financial intermediary channels, such as trade credit; changes to the PRA’s regulatory approach to make it easier to set up new banks; and a reduction in capital requirements for SME lending under EU legislation.
Commenting on changes to the Funding for Lending Scheme, George Osborne, Chancellor of the Exchequer said:
“The government’s long-term economic plan is working with the Funding for Lending Scheme playing a vital role in supporting the recovery. Now that credit conditions for households and large businesses have improved, it is right that we focus the scheme’s firepower on small businesses, which are the lifeblood of our economy. That’s also why we’ve reformed the banks, introduced the British Business Bank and are now focussing the Funding for Lending Scheme on supporting them.”
Phil Orford, chief executive of the Forum of Private Business, said:
“The latest FLS figures show yet another net reduction of funds reaching small businesses. Once again these figures would definitely be worse still if the scheme was not in place. It remains disappointing to see less money being lent in this crucial part of the UK economy at a time when [the] need to establish an infrastructure for sustainable growth is essential.”
The FLS half term report remains as true as ever “must do better”.