issue:
1 June 2013
Funding for Lending Extension In this article, David Griffith our Residential and Commercial Funding Director of Thomas Carroll Financial Advisers Ltd discusses the positive impact of the Funding for Lending (FLS) on small and medium sized businesses. The Funding for Lending Scheme (FLS) designed to boost the economy has been extended and reworked in an attempt to help obtain more credit for small firms. Under the reforms announced by the Treasury and Bank of England the country's banks are being offered an up to ten-fold increase in the low-interest funding they can access in return for extending loans to smaller businesses. The FLS, they said, is also being opened up to nonbank lenders such as invoice finance houses and leasing firms that provide around £20bn of working capital to small firms, and will be extended until January 2015. The scheme was launched last summer to offer banks and building societies funding at low interest rates on the condition they are passed on to households and businesses. But while it has been helping the home loans sector, it has failed to make an impact on small businesses
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which have complained about the fact that they remain starved of credit. Bank figures last week showed net lending to companies had slumped by £4.8bn in the three months to February. Banks and Building Societies drew £13.8bn from the FLS in its first five months of operation, but loans were cut to householders and businesses by £2bn during the final quarter of 2012. Under the new deal, every pound of additional lending to small and medium-sized enterprises (SMEs) next year will allow the lender to access £5 of discounted funding from the Bank. The ratio in the rest of the scheme is 1:1. In a bid to speed up the flow of much-needed credit into the system, each pound lent to SMEs for the rest of this year will allow a draw-down of 10 times that in 2014. The Treasury said there was "no upper limit to the scheme" and the move was hailed by the Chancellor George Osborne, who said: "This is a big boost for the small and medium-sized businesses that are at the heart of the British economy. "The Funding for Lending Scheme has already reduced the costs of household mortgages and loans for businesses. This innovative extension will now do
even more for small and medium-sized businesses so that they can play their full part in creating new jobs." Source: Bank of England Thomas Carroll Property Finance Service Thomas Carroll Independent Financial Advisers Ltd is proud to have received the inaugural ‘Chartered Financial Planners of the Year’ in 2009 awarded by The Personal Finance Society, followed by ‘Retirement Planning Firm of the Year’ award in 2010 and 2011, and last year received ‘Corporate Adviser Firm of the Year’ at the Bankhall awards. Established as part of the Thomas Carroll Group, the principle of independent advice is central to our culture. With over 24 year’s experience in property finance David Griffith can help you understand the opportunities available under the FLS. Thomas Carroll will provide an impartial view of the property funding market, including advice on: Commercial Property Transactions SIPP Property funded purchases Buy to Let Mortgages Multi-Let & HMO Funding Development Finance Contact us If you wish to discuss the content of this brief in more detail please contact David Griffith: DD: 02920 855246 M: 07975 428975 E: david.griffith@thomas-carroll.co.uk V: www.thomascarroll.co.uk
Thomas Carroll Group PLC
t
029 20 86 95 31
Pendragon House, Crescent Road,
e
info@thomas-carroll.co.uk
Caerphilly CF83 1XX
w thomas-carroll.co.uk