The government has announced a one-year extension to the Funding for Lending Scheme (FLS), which incentivises banks and building societies to boost their lending, with a renewed focus on helping small businesses as part of efforts to ensure continued support for SME lending say Harris & Co accountants Northampton, the specialist small business accountants who in their role as chartered accountants often help businesses raise the ncapital they need to develop and grom.
The incentives in the FLS were re-focussed towards business lending in November 2013, but the Bank of England and the Treasury have now said that the main thrust of the scheme going forward will be to encourage lending to SMEs in 2015.
The drawdown window for the FLS extension will remain open until 29 January 2016. Current participants in the FLS extension will remain part of the scheme unless they choose to opt out, and they will retain borrowing allowances earned by lending from Q2 2013 to Q4 2014.
Participants will be able to earn further allowances by lending to SMEs in 2015, with such lending strongly incentivised by allowing participants to draw £5 in the scheme for every £1 of net lending to SMEs.
Net lending to financial leasing corporations and factoring corporations – which can be important sources of finance for some SMEs – will continue to count towards allowances generated in 2015, pound for pound.
All other terms of the FLS extension remain unchanged, with drawings continuing to be for a term of four years and attracting a fee of 25 basis points.
George Osborne, Chancellor of the Exchequer, said:
‘The government’s long-term economic plan is working with the Funding for Lending Scheme playing a vital role in supporting the recovery.’
‘Now that credit conditions for households and large businesses have improved, it is right that we focus the scheme’s firepower on small businesses, which are the lifeblood of our economy. That’s also why we’ve reformed the banks, introduced the British Business Bank and are now focussing the Funding for Lending Scheme on supporting them.’