4R Blog

RSS Feed

Business lending 'has reasons for optimism'

Date Added: 11/01/2013  

Business lending in the UK could be set to improve in the coming 12 months as a result of a range of measures being taken by the coalition government.

According to a report by the Economist, one of the reasons why the flow of credit to the country's small firms has dried up in recent years is a reluctance from companies to increase their debt.

However, many of the businesses that have applied for finance from high street banks since the start of the recession five years ago have been turned down, due to the fact that a lot of lenders have tightened up the criteria that helps them decide who to lend cash to.

The Funding for Lending Scheme (FLS) is the Treasury's latest attempt to kickstart business lending in the UK and it was designed in conjunction with the Bank of England.

It sees banks given incentives to increase the amount of money they lent to small to medium-sized enterprises, which in turn could act as a stimulant for the economy as a whole.

Jason Napier, an analyst for Deutsche Bank, told the publication that while the FLS is a well-designed idea, people need to be realistic about what it is going to be able to achieve.

"Although the FLS will help, the banks hit hardest by the financial crisis, including RBS and Lloyds - two of Britain’s biggest lenders - are likely to continue to shrink in 2013. The headwinds are gales," it was noted by the news provider.

Bodies such as the Federation of Small Businesses (FSB) have criticised the FLS for not going far enough to improve business lending for those firms in need of company debt advice.

John Walker, chairman of the FSB, claimed that the programme will only work in making credit cheaper to those successful in their loan applications.

Need advice on Winding up Orders? Call 0800 9020123

Posted by Michael Beam

Get the Help You Deserve

0800 90 20 123

Urgent Help Call 24/7

020 7183 2606

We'll Call You

Request a Callback