George Osborne’sFunding for Lending Scheme (FLS) scheme has been hailed as “encouraging news” for ambitious UK businesses. The initiative was launched last month and is designed to make more money available to companies and homeowners.
As part of FLS, banks will borrow from the Bank of England at low interest rates on the proviso that those funds are set aide to make loans and mortgages easily accessible for those businesses and people who require financial help.
“The FLS is designed to incentivise banks and building societies to boost their lending to UK households and non-financial companies,” said a statement on the Bank of England website.
“It will do this by providing funding to banks and building societies for an extended period, at below current elevated market rates, with both the price and quantity of funding provided linked to their performance in lending to the UK non-financial sector.”
First-time buyers are expected to significantly from the introduction of the FLS, along with small businesses.
“The announcement of this initiative offers encouraging news to business owners that the lending picture is beginning to change,” said a spokesperson for makeitcheaper.com, which is a website designed to help businesses save money on a range of different outgoings.
“The success rate for finance applications has clearly been low in recent years, but as advocates of small to medium sized businesses in the UK we hope the Funding for Lending scheme can bring about a significant increase to that figure.
“It’s also important for finance applicants to persevere if they’re not successful first time around, because the latest figures suggest that around 50% of rejected applications are being overturned after appeal.”
For companies that head online and access Make It Cheaper energy savingrevenue and money saved on things like insurance and telecoms can help inject vital cash back into businesses at a time when so many firms are struggling to survive.
Governor of the Bank of England Mervyn King, meanwhile, thinks the FLS will impact positively on the economy, as he said: “This joint action by the Bank and the Treasury creates strong incentives for banks to expand their lending to the real economy. The more banks expand lending, the more they can use the Scheme.
“That will encourage banks to make loans to families and businesses both cheaper and more easily available.”
Chancellor of the Exchequer Osborne observed: “The Treasury and the Bank of England are taking coordinated action to inject new confidence into our financial system and support the flow of credit to where it is needed in the real economy – showing that we are not powerless to act in the face of the eurozone debt storm.”