Improved funding scheme for small businesses

The Government has extended its Funding for Lending scheme (FLS) to make it easier for small and medium-sized businesses to get hold of money.

The initiative, which has been running since August 2012, will now run for an extra year, continuing until January 2015. The terms of the extension are aimed at encouraging banks to lend money to small and medium-sized enterprises (SMEs), helping them to survive and thrive during the tough economic climate.

During 2014, banks will be able to draw £5 from the scheme for every £1 of net lending to SMEs. And for the rest of this year, every £1 of net lending to SMEs will add £10 to the bank’s 2014 initial borrowing allowance. The scheme will also now include other types of lenders, including financial leasing corporations and factoring corporations, which already provide small businesses with almost £20 billion of working capital each year, as well as some mortgage and housing credit corporations.

Move may encourage start-ups

Being able to borrow money more easily may encourage more budding entrepreneurs to follow their dream of starting a business. Bizspace provides flexible business accommodation throughout the UK for start-up businesses as well as SMEs of all types. We also have resources and special offers for start-ups to guide them through that all-important first year.

Business funding  is essential for companies to get off to a flying start. Having professional business accommodation, as well as essentials such as a logo, website, business cards and brochures, gives new customers the confidence that they are dealing with a company that knows what it’s doing.  Funding also is important to help start-ups to take on employees and manage cash-flow and finances at an early stage.

We understand how important it is for start-ups to receive the right kind of funding and also support the Startup Loans Scheme, which has helped more than 2,000 businesses get off the ground.

Chancellor is optimistic

Chancellor George Osborne hopes the extended FLS will have the same kind of positive effect on availability of loans for small businesses as it did on mortgages.

He says: “This is a big boost for the small and medium sized businesses that are at the heart of the British economy. 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.”

The Bank of England says that while households and larger businesses had started to find it easier to borrow money, the improvement in credit conditions has not been as great for SMEs.

Governor of the Bank of England Sir Mervyn King says: “The changes announced build on that success by broadening the scope of the scheme and ensuring that it will continue to support the supply of credit, especially to small companies, into 2015.”