Bank lending to SMEs up £635m in Q1 2015

Net lending to small and medium-sized enterprises (SMEs) from banks taking part in the Funding for Lending Scheme (FLS) grew by £635m in the first quarter of the year.

It’s an encouraging turnaround from the £800m decline experienced in Q4 2014. Much of the lending increase can be attributed to Lloyds, who provided an extra £409m to growing small firms.

Bank of England data revealed RBS, Aldermore Bank and Shawbrook Bank each played their part too, lending £136m, £132m and £107m respectively.

At the last count, 34 financial institutions are currently involved in the FLS; of which almost half (15) increased their lending in Q1 2015.

The FLS provides funding to the high street banks and building societies involved for an extended period, with the price and quantity of funding directly aligned with lending performance.

The scheme was launched back in the summer of 2012 by the Bank of England and HM Treasury, in a bid to reward banks and building societies that lend to ambitious small businesses.

The Bank’s statement said: “The improvement in corporate credit conditions in part reflects the significant fall in bank funding costs that has occurred since the launch of the FLS.

“Over the first quarter of 2015, the level of funding costs remained low. The FLS extension will continue to support lending to SMEs in 2015.”

While the increase in net lending this year has been broadly welcomed, experts insist there’s still plenty of work ahead to lend more to the businesses that are the bedrock of the UK economic recovery.

Simon Goldie, head of asset finance, Financial and Leasing Association, said: “We welcome the support for enterprise, but would also like to see the government provide a comprehensive online directory of finance providers to help firms find the funding they need in a one-stop-shop.”



Image: Matt Buck

Date published 3 Jun 2015 | Last updated 3 Jun 2015