Osborne set to extend Funding for Lending Scheme

April 24, 2013

The Funding for Lending Scheme (FLS) could be extended as part of Government plans to increase the number of loans made to small and medium-sized businesses, according to latest reports.

Chancellor George Osborne is expected to expand the £80bn scheme before a visit to Britain by the International Monetary Fund (IMF) in May.

It comes amid pressure from the IMF on Osborne to rethink the timescale of his austerity programme.

Launched in August 2012, the FLS is designed to boost lending to homebuyers and small businesses by providing banks with cheap, state-backed funding.

It enables banks and building societies to borrow the equivalent of up to 5% of their current lending total, with the option to increase this if they meet certain conditions.

The scheme is due to end in January 2014, although some experts now believe that it will be extended to January 2015 on the condition that more loans are made to SMEs.

A Bank of England’s agents’ report published last year claimed that the FLS was having a positive impact on UK homeowners, with mortgage lending rates beginning ‘to ease’.

However, the report also suggested that lending to small businesses was still sluggish, adding that ‘some business lenders appeared still to be tightening terms’.


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