Funding for Lending to SMEs drops £700m in Q1
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Data from the Bank of England shows a £700 million fall in finance allocated to small and medium-sized businesses under the Funding for Lending scheme in the first quarter of 2014.

 

The overall net lending to businesses under Funding for Lending in Q1 was -£2.7 billion – with £2 billion of this consisting of lending to large businesses.

 

The remaining £700 million drop was a net outflow of funds from SMEs in a quarter when the total outstanding drawings under Funding for Lending ended at £43.3 billion.

 

On a sector-by-sector basis, the majority of the aggregate fall in net lending to private non-financial corporations in Q1 was accounted for by the real estate sector.

 

According to the Bank of England report, this is likely to be because the banks are trying to reduce their exposure to bad debt in the sector.

 

However, the figures are unlikely to please firms of all sizes who are still finding it difficult to access funding from their business banking provider.

 

Regardless of sector, size or type of business, the data shows a continued tightening of the amount of finance available.

 

This seems at odds with the very concept of the Funding for Lending scheme, and seems to contradict the more general improvements in the economy seen in recent months.

Source:

http://www.bankofengland.co.uk/publications/Pages/news/2014/084.aspx

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