Business disappointment at lending figures
by business editor Trevor Sturgess
Business leaders are disappointed by falling lending figures
under a government-trumpeted scheme.
The Bank of England revealed the Funding for Lending scheme
- designed to help businesses and home buyers, but widely condemned
for slashing savings returns - paid out £2.4 billion in the
three months to February, down £1.5bn from June.
The scheme is credited with kick-starting the mortgage market
but failing to help businesses as much as anticipated. Weak demand
has also been cited for the lower figures.
Roger House, chairman of the Federation of Small Businesses in
Kent and Medway (pictured right), said the figures reflected the
difficulty small firms faced in seeking finance.
"It is clear that Funding for Lending is benefitting the
mortgage market more than the small business sector, so we would
encourage the government and the Bank of England to see how new and
challenger banks can use the scheme better," he said. He praised
new banks for looking more favourably on smaller firms as a way of
helping them attract new customers and grow.
Christopher Shaw, chief executive of alternative finance
provider Platform Black, said the figures made "a mockery of most
of the big banks' claims about being willing to lend."
The Forum of Private Business claimed that as borrowing costs
were at rock bottom, the figures were disappointing. It was not
convinced that demand was weak, saying that untold damage had been
done to traditional relationship banking methods and that firms
"are still wary of traditional lenders".
The CBI, the employers' organisation, said the scheme's impact
was strongest in the housing market, but added businesses were
also benefiting. It admitted the scheme was operating "against the
headwinds of bank deleveraging and muted confidence in the
Lloyds Banking Group insisted it was continuing to grow lending,
including to small and medium enterprises (SMEs) where there had
been 4% year on year growth.
Gareth Oakley, regional director for Lloyds TSB Commercial
Banking, said: "Between September and December 2012 we committed
£11bn of FLS eligible lending through our discounted offers. We
have pledged to lend at least £5bn to SMEs in 2013 and we are
offering 1% discounts to all SMEs for the life of their loans. We
have also promised to lend £6.5 billion to first time buyers."
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