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FLS is 'positive development' for business lending

Date Added: 17/07/2012  

The announcement of the Funding for Lending Scheme (FLS) by the government earlier in the week will come as a boost to small businesses that have struggled to secure the finance they need to grow and boost the economy as a result.

According to one of the UK's leading challenger banks Aldermore, the launch of the FLS should be a positive development in the attempts of the coalition to get banks lending to the country's growing small firms.

Chief executive officer of Aldermore Phillip Monks stated there have been a range of measures designed to boost the economy over the course of the last two years since the coalition government came to power in May 2010.

Although these have only had limited success, which has seen the economy slip back into recession earlier this year following successive periods of negative growth, there appears to be a bigger chance of the FLS having an impact due to its focus on aiding small companies.

The FLS works by offering an incentive to firms to lend more money to the country's businesses, as they will be able to access better rates of interest from the Bank of England, which is also involved in the programme.

"Crucially, it appears to be anchored around net new lending figures by incentivising banks to lend more if they want access to a lower cost of funds. The FLS should be a key plank in ensuring a greater flow of lending to small businesses and homeowners right across the country," commented Mr Monks, who added that it is also important that the move works for challenger banks such as Aldermore, as well as the more established names in the sector such as RBS, Barclays and Lloyds TSB.

He highlighted the fact this could help to encourage more competition in the banking sector, which he noted is "desperately needed" in the UK at the present time.

The Council for Mortgage Lenders was also quick to praise the launch of the FLS, which comes against the backdrop of the ongoing eurozone crisis.

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Posted by Miles Pritchard

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