Despite the Government’s best efforts, there has been a further drop in lending within the UK business sector. Figures released have shown that the number of loans being offered by banks has continued to fall, regardless of the Funding for Lending scheme which the Government had hoped would encourage more small business loans.
Funding for Lending was introduced last August and it was hoped the scheme would encourage banks to lend to individuals and businesses. This was hoped to provide a boost for the UK economy, but currently the figures aren’t adding up.
The Bank of England has said that net lending fell by around £2.4 billion in the last quarter of 2012 when compared to the previous three months. The Bank of England commented; ”Some banks are reducing parts of their lending activities, consistent with the continued adjustment of their business models in the wake of the financial crisis, or responding to state aid conditions.”
These types of figures undermine the banks’ claims that they are upholding their end of the small business loans market. It shows that in fact many are no more willing to lend now than in the years before. Total net lending by banks taking part in the Funding for Lending Scheme is down by about £1.5 billion since June last year. This shows the scheme is not living up to expectations.
If your small business needs business finance, then it could be worth looking beyond the banks to alternative lenders more willing to accommodate a variety of businesses. Invoice finance, for example, can provide a flexible, accessible option for finance for any business that issues payment terms with invoices – from start ups to medium sized businesses, it can provide a real solution to many business problems.