Bank lending to SMEs continues to fall
03 Sep 2014
Figures released by the Bank of England (BoE) show that despite the Government’s Funding for Lending Scheme (FLS), SMEs are still not receiving the boost that was hoped for.
John Longworth, Director General of the British Chambers of Commerce, said: ‘The real test for the scheme has always been whether it is able to get credit flowing to young and fast-growing businesses. Unfortunately many of these firms remain frozen out when it comes to accessing the finance they need to fulfil their potential.’
The figures show that net lending by the banks involved in the FLS fell by £3.5 billion between April and June. Specifically, lending to SMEs fell by £435 million.
John Allen, national chairman of the Federation of Small Business, said: ‘Small firms are increasingly confident across every sector, and in every region. But these new FLS figures again show that growth ambitions are not being translated into demand for finance, especially for small businesses that have not been able to capitalise on cheaper credit.’
The BoE has claimed that ‘some of the weakness in bank lending to smaller businesses, which have persisted despite the fall in bank funding costs, may reflect weaker demand. The FLS extension will continue to support lending to SMEs in 2014.’