Significant increase in SME Lending in Q2 2015

Net lending to small and medium sized enterprises (SMEs) in the UK has significantly increased through the second quarter of 2015. The new figures from the Bank of England (BOE) Funding for Lending Scheme (FLS) shows UK banks and building societies gave a net total of £490 million to SMEs in the period. This is really encouraging news for both those thinking of starting-up in business and already established in business.
According to the data, the financers who were the most likely to lend to small businesses were Lloyds Banking Group and Aldermore. Lloyds lent £527m and Aldermore £122 million, followed closely by Nationwide and RBS who gave £279m and £266m themselves through the April – June period. This information emphasises the huge improvement there has been in the FLS when compared to the same quarter last year, when there was actually a contraction in lending of £400m. This was a major concern at the time with many questioning the effectiveness of FLS, but this new research has allayed those fears and reflects the upturn in the UK economy with more SMEs looking to acquire funding.
The Managing Director of Mid Markets and SME Banking at Lloyds, Tim Hinton, was quoted as saying:
“We have seen how successful FLS has been in helping small businesses grow with competitively priced funding, helping us to increase our small business net lending by 23% since the start of 2011 while the market reduced by 16%. We remain committed to participating in FLS, enabling more small and medium-sized businesses to grow and help Britain prosper.”

An overdue change to the Funding for Lending Scheme

The FLS was incarnated in 2012 by the BOE and HM Treasury, aiming to encourage banks to increase lending into the UK economy with incentives, but was changed in early 2014 to concentrate on SME lending. This was achieved by giving extra funding to those institutions involved in the scheme, for an extended period of time, with price and quantity of borrowing affected by overall lending performance.

Good News for Growth

The FLS has come in for a great deal of criticism from my clients, but now looks to have got its act together, which is great news for SME growth. And of course, start ups can still access the Government Start Up Loan scheme. If you would like to know more about accessing finance to grow your business, please get in touch.

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