The Bank of England’s latest figures show that lending under the scheme to SMEs fell by a net of approximately £400m in Q2, after falling by more than £700m in the previous quarter.
John Allan, national chairman of the Federation of Small Business, said: “Small firms are increasingly confident across every sector, and in every region. But these new Funding for Lending figures again show that growth ambitions are not being translated into demand for finance, especially for smaller businesses that have not been able to capitalise on cheaper credit.
“While Funding for Lending has had an impact on the price of credit, the trend in lending suggests there remain issues with credit allocation through the banks. That is why we believe the Competition and Markets Authority needs to review the market, ensuring that competition is working in the sector and that firms can access the finance they need to grow.”
The British Bankers’ Association (BBA) pointed out that gross lending to businesses is in fact increasing, as businesses are paying back debt at a great rate – £5.6bn of existing loans was repaid in Q2.
The BBA’s executive director of business finance, Irene Graham, said: “BBA figures out today show that we are starting to see a pickup in borrowing by small and medium sized businesses. It is also encouraging to see that the Funding for Lending Scheme is continuing to be used to help businesses. Companies are also increasing their cash reserves, which suggests that the sector is in a healthy position.”
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