The Bank of England and the Government have long been hunting for a way to encourage growth in the economy. But one of the biggest hurdles to overcome is the poor access to finance that has been plaguing businesses since the recession took hold.
In a further attempt to boost lending, Bank and the Treasury have introduced a new phase of the flagship Funding for Lending Scheme (FLS), which is specifically designed to help small businesses. So far the scheme has not been particularly successful; despite the range of incentives put in place to encourage banks to open their coffers, business lending has remained low since the recession took hold.
Hopefully, this latest stage will start to turn the tables as the incentives for lending are increased. Banks taking part in the programme will be able to lend to alternative credit providers, mortgage and housing credit corporations, broadening the options for economic stimulation. Secondly, banks will be able to access the FLS money for an extra year as the scheme is extended to the end of January 2015.
Adam Marshall, policy director at the British Chambers of Commerce, commented on the news: “What a lot of SMEs will be looking for is money actually getting to the front line on reasonable terms, and not just to the safe bets.”
We hope the banks manage to deliver this time, particularly so that the distressed sector can realise some of its potential and provide a much needed boost in delivering jobs. But whether or not the latest update to the scheme will succeed remains to be seen and there still a chance that the larger financial organisations won't pass on the cheap business loans to the front line. 
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