The amount of net lending by participants in the Bank of England’s (BOE) Funding for Lending Scheme (FLS) fell £2,430m in Q3 2014 because rising repayments and flat new lending.

The vast majority of the fall (£2,218m) came from lending to large corporates, though the amount of net lending to SMEs fell by £128m.

A spokesperson for the BoE said part of the reason for the fall was because the amount of repayments increased substantially, bringing the net figure down.

One bank which did improve its net lending to SMEs was Aldermore, which saw net lending increase to £82m, of which £73m was to SMEs.

Aldermore chief executive Philip Monk said: " "It is imperative that banks focus on providing flexible finance for SMEs, as well as providing wider support in the form of customer service, above and beyond simply providing funding. We are committed to ensuring that strong, viable SMEs across the UK receive the funding they need to grow and succeed."

The number of groups participating in the FLS rose from 36 in Q2 2014 to 38 in this quarter.
From the beginning of 2014 to the end of September, a total of £7,212m had been drawn from the FLS, bringing the total amount since its inception to £47,595m.

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Negative reactions

P2P lender Funding Circle has commissioned a survey of 100 of its customers in response to the BOE’s figures. Of those asked, 86% said they did not believe the FLS scheme was working.

Samir Desai, chief executive of Finding Circle, said: ""Funding for Lending is still not helping enough small businesses access finance. Net lending is flat and 86% of small businesses that use the Funding Circle marketplace believe the scheme is not working for them.

"Whilst Funding for Lending figures continue to remain muted, marketplace lending is growing exponentially"

The survey also found that nearly all (95%) said they wanted to see more collaboration between the government and the financial services industry to ensure small business can easily access finance.

A total of 97% of those asked believe the government needs to do more to ensure businesses can easily access finance, while just over half (55%) backed the Government proposal to require banks to refer all SMEs they are unable to fund to alternative providers.