The UK Chancellor for the Exchequer George Osborne has said that the Treasury plans to extend the Funding for Lending Scheme (FLS) for an extra year until 29 January 2016.
A statement from the UK Treasury said: "Given uncertainties in the global economy, and the risk of shocks that might impact on credit conditions and jeopardise the recovery, the Treasury and the Bank of England announced on 2 December that the FLS will be extended for 1 year, until 29 January 2016.
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"Unused borrowing allowances from the scheme as of 31 January 2015 will continue to be available for drawdown in this period. The FLS will be further focused on incentivising lending where it is most required, for SMEs, and is being further tapered to remove lending to large businesses."
The Treasury said additional borrowing allowances in 2015 will be generated through net lending to SMEs, with participants able to draw £5 of funding for each £1 of net lending to SMEs.
The FLS will complement various other initiatives in train to support credit to SMEs, including programmes by the British Business Bank to make finance markets work better for SMEs, and the government’s proposals in the Small Business, Enterprise and Employment Bill to improve access to SME credit information.
Last week Leasing Life reported 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.
