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FLS 'will not boost business lending'

Date Added: 27/09/2012  

Doubt has been cast on whether a government scheme to boost business lending is having a positive impact on the flow of credit to the nation's small firms.

The coalition teamed up with the Bank of England to launch the Funding for Lending Scheme earlier in the summer, which offers banks incentives to increase lending figures.

Danny Waters, chief executive of loan company Enterprise Finance, told BBC News that the majority of the loans to have been approved under the initiative have been to mortgage borrowers, who he claimed already have plenty of choice on the market.

"Much the same applies to the corporate sector. Company loans can be secured but not by the companies that need them most, namely the start-ups and SMEs that drive the economy," he said.

Paul Fisher, the Bank of England's executive director for markets, has expressed confidence that the Funding for Lending Scheme will work in time.

Mike Cherry, national policy chairman of the Federation of Small Businesses, recently said banks are in a "risk-averse" mood.

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Posted by Michael Beam

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