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New figures show higher lending
SMALL businesses struggling to obtain credit have received increased hope after figures showed net lending to the sector lifted for the first time in five months.
Net lending to small and medium-sized businesses (SMEs), the different between loans paid out by banks and the amount repaid, had been negative between July and October.
However, new Bank of England figures show it increased by £200m in November, though net lending to all non-financial businesses fell overall by £3.1bn.
The figures come after the Funding for Lending scheme, launched in 2012 to encourage loans by offering banks cheap finance in exchange, was strengthened last year to skew incentives towards SME financing.
The scheme is not yet seen as having benefited SMEs in the same way as it appears to have boosted the housing market, which is no longer part of the scheme.
Banks have been under pressure over the struggles of small businesses to obtain credit.
However, the British Bankers' Association (BBA) says gross lending to SMEs, which stood at £4bn in November, was 38 per cent higher than the £2.9bn seen in the same month the year before.
Anthony Browne, BBA chief executive, said: “This is more good news for the economy at the start of the new year.
“Positive net borrowing and on-going double digit growth in gross lending show that SMEs are feeling more confident about investing, and a low interest environment is helping the recovery.”