It’s likely that news sites and social media will be all atwitter with discussions and predictions of the contents of the imminent autumn statement. High up the business agenda will be access to funding, with SMEs and business groups reaching out to George Osborne, chancellor of the exchequer, to find solutions to current lending woes. Which is almost certainly why the chancellor is trying to show his commitment to addressing this issue, announcing ahead of the autumn statement that the government will be extending the Funding for Lending scheme (FLS) for another year.
The FLS scheme, which was launched in mid 2012, was originally set to cease in January 2015; however it has been extended by one year to support lenders and SMEs with incentives and access to cheap funding. HM Treasury has also pledged £400m to extend capital funds and has guaranteed up to £500m of new lending to enable banks to borrow cheaply from the Bank of England and provide more accessible funding for SMEs.
Mark Carney, governor of the Bank of England said, “By providing a backstop for funding for banks, the FLS has supported access to credit across the economy during an exceptional period. As the banking system has been returned to health, the need for that backstop has been reduced…The extension announced today concentrates the FLS on the one area where support remains warranted: the supply of credit to SMEs.”
George Osborne, chancellor of the exchequer, spoke ahead of his autumn statement to announce that, “The government’s long-term economic plan is working with the Funding for Lending Scheme playing a vital role in supporting the recovery. Now that credit conditions for households and large businesses have improved, it is right that we focus the scheme’s firepower on small businesses, which are the lifeblood of our economy. That’s also why we’ve reformed the banks, introduced the British Business Bank and are now focussing the Funding for Lending Scheme on supporting them.”
Whilst FLS has faced its fair share of detractors in the past, if this extension ultimately helps SMEs access funds more easily then you won’t hear us complaining.