Funding for Lending scheme extended by Bank of England

  The Bank of England and HM Treasury have announced an extension to the Funding for Lending scheme, which was initially introduced in August 2012.   Since that time, the BoE claims lending costs to small businesses and households have dropped, while the availability of credit has increased.   The scheme has also made fundingRead More

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The Bank of England and HM Treasury have announced an extension to the Funding for Lending scheme, which was initially introduced in August 2012.

 

Since that time, the BoE claims lending costs to small businesses and households have dropped, while the availability of credit has increased.

 

The scheme has also made funding costs fall sharply for banks and building societies, and the government is keen to ensure that confidence remains in the availability of funding to financial services providers for several years to come.

 

Under the extended scheme, funding for lending to UK individuals and businesses should remain more easily accessible until at least January 2015.

 

The scheme is also being “heavily skewed” in favour of small to medium-sized enterprises, with access to funding ratcheted up by a factor of five for banks that lend to SMEs in 2014.

 

For each pound lent to small businesses during the remainder of 2013, lenders will receive an initial allocation in 2014 of ten times that amount.

 

Thirdly, the scheme is being extended to incorporate “lending by banking groups involving financial leasing corporations and factoring corporations”.

 

Both of these, the BoE press release states, and important avenues to lending for some British SMEs.

 

Chancellor of the Exchequer George Osborne said: “The Funding for Lending scheme has already reduced the costs of household mortgages and loans for businesses.

 

“This innovative extension will now do even more for small and medium-sized businesses, so that they can play their full part in creating new jobs.”

 

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