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Business lending conditions 'starting to loosen'

Date Added: 01/02/2013  

Business lending conditions in the UK may be beginning to loosen, it has been claimed.

Melanie Bowler at Moody's Analytics stated credit is becoming more widely available, though many businesses are still finding it hard to access loans.

This could mean those firms in need of business debt advice are unable to get the funding they need to secure growth and a firmer financial footing.

Speaking to City AM, Ms Bowler said: "UK credit conditions are slowly starting to loosen."

The Funding for Lending Scheme (FLS) - which was launched by the coalition government in conjunction with the Bank of England last year - has had a positive impact, according to Katie Evans at the Centre for Economics and Business Research.

She stated there are "tentative" signs that the programme is starting to help firms that are applying for business loans to get the money they need.

The FLS works by the government offering incentives to high street lenders in a bid to get them to increase the number of loans they are approving to small businesses.

Data revealed by the Bank of England has shown interest rates on new deposits have dived from 3.01 per cent in August to 2.11 per cent in December.

While business lending conditions remain difficult for a lot of companies, there has been a boost to mortgages as a result of the launch of the FLS last year.

The government might therefore need to tweak the conditions of the programme in order to ensure the flow of credit to the UK's small firms improves in the coming months.

It has insisted regularly that the economic recovery of the UK is dependant on the success of the country's small businesses.

Economic figures recently showed UK growth contracted in the last three months of 2012 and there are now fears a triple-dip recession could be on the way in 2013.

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Posted by Michael Beam

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