SMALL firms have enjoyed a rare increase in lending through a flagship Bank of England initiative, according to the latest data.
The central bank said participants in its Funding for Lending scheme (FLS) lent £600 million to small and medium-sized enterprises (SMEs) during the first quarter, compared with an £800m contraction in the final three months of 2014.
State-backed lender Lloyds Banking Group accounted for the bulk of the FLS total, passing on a net £425m to small companies. In comparison, the figures show net lending by the Nationwide building society shrank by £325m in the first quarter.
The overall increase was in sharp contrast to the average quarterly fall in net lending of £500m, even though the Bank of England said credit conditions have improved for SMEs over the past few years.
John Longworth, director-general of the British Chambers of Commerce, said: “If our young, fast-growing businesses are to reach their potential then much more needs to be done to make sure they can get access to the finance they need. We need to have the funding mechanisms to back their ambition.”
• The economic slowdown at the start of the year was confirmed by official figures yesterday, dashing hopes of an upgrade.
As the dominant services sector grew just 0.4 per cent, the slowest since the end of 2012, overall first-quarter growth came in at 0.3 per cent, in line with an earlier estimate. Economists had predicted the figure would be upgraded to 0.4 per cent.