The Bank of England’s governor Mark Carney has today announced that the government-backed Funding for Lending Scheme to boost mortgage loans is to be scaled back, focusing instead on business lending.
The Funding for Lending Scheme, launched last year, made available up to £60bn to banks and building societies so long as that money was lent to businesses and individuals.
Today’s announcement indicates that financial resources will no longer be aimed at house buyers but will refocus where it is most needed – to underpin the supply of credit to small businesses over the next year.
Gordon Millward, regional chairman of the Federation of Small Businesses (FSB), said:
“This is a surprising yet refreshing announcement which will make a difference to lending to thousands of our members and millions of small firms. It is something the FSB has raised with the Governor of the Bank of England and he is clearly listening.
“It is encouraging that he has recognised the contribution small firms make to job creation and the real economy has been given priority over the housing market, which is receiving assistance in other areas such as Help to Buy.
“FLS has already helped to reduce the cost of finance for businesses.
“What we now need is to see a focus on increasing the number of firms getting access to the finance they need to grow.”