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Lloyds 'on track to beat business lending goal'

Date Added: 03/04/2013  

Lloyds has revealed it is on track to beat its goal of lending a total of £1 billion to the UK's manufacturing sector in a bid to boost the economy.

The bank, which is 39 per cent owned by the government, stated that it has already lent £700 million to manufacturers in the past six months.

It launched its Manufacturing Commitment last September and set a goal of £1 billion to lend to small to medium-sized enterprises (SMEs) within the industry.

Lloyds is using the Funding for Lending Scheme set up last year by the Bank of England and the government to offer a one per cent reduction in the interest rate for new business loans that applies for the full term of the loan and to businesses of all sizes.

"We have already seen a great appetite from manufacturing businesses that want to invest and expand even in these uncertain times," David Oldfield, head of SME and mid-market banking at Lloyds, said.

Lloyds is now expecting to beat the £1 billion target before September this year.

But despite the fact the scheme has been a success, data shows that over the course of the last three months of 2012, Lloyds' cumulative net lending fell by £3.1 billion.

Reaction to the Funding for Lending Scheme has been mixed, with advocates claiming it is too early to judge whether or not it has been a success. Critics point out business lending has been falling ever since it was launched last year.

Chancellor George Osborne was recently urged by the Forum of Private Business to take action to improve lending to SMEs and boost the UK's economy as a result.

With the economy facing a triple-dip recession, the body stated the chancellor ought to improve the flow of credit to small firms and allow them to grow.

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Posted by Julie Cutts

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