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Funding for Lending Scheme is extended

 

The Funding for Lending Scheme (FLS) has been extended as part of Government plans to increase the number of loans made to small and medium-sized businesses.

 

Chancellor George Osborne made the decision to expand the Bank of England’s £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 was due to end in January 2014 but is has been extended for another year to 2015.

 

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’.