Skip To The Main Content
07 December 2017

Bank of England calls time on £40 billion small business lending initiative

Responding to the Q3 2017 Funding for Lending Scheme usage update ahead of the initiative’s closure next month, Mike Cherry, Federation of Small Businesses (FSB) National Chairman, said:

“Given that we’re faced with long-term supply and demand side challenges when it comes to small business access to finance, it’s instinctively concerning to see the Bank of England calling time on the Funding for Lending Scheme.

“However, there are lessons to be learned from the initiative. Questions have been raised about its effectiveness in reaching the very smallest businesses. There are probably many mid-sized firms that have sealed deals off the back of the scheme that would have been successful without it.  

“The Funding for Lending Scheme highlights the fact that banks are not necessarily the best conduit for reaching the smallest firms that are most in need of finance for growth.

“We need to get small businesses thinking about all their options. Only one in ten small firms applies for external finance, and a tiny proportion of those consider equity finance, even though it will be the right route for many. That has to change.     

“The Chancellor’s announcement of plans to unlock £20 billion of investment in small businesses at the Autumn Budget last month was encouraging to see. A big potential roadblock ahead is loss of access to the European Investment Fund, which puts hundreds of millions of pounds behind small business finance markets annually. It is welcome to hear the Chancellor saying he is ready to “step in” should we lose access to the EIF.”