In an attempt to stimulate the growth of small businesses throughout the UK, Chancellor George Osborne is preparing to pipe billions through the Bank of England’s cheap credit scheme.<br />
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The <a href="Funding">http://www.hm-treasury.gov.uk/ukecon_fundingforlending_index.htm">Fundi… for Lending Scheme (FLS)</a>, which is likely to be extended through 2015, is the Bank of England’s flagship programme, which provides about £20 billion in working capital to small businesses throughout the UK.<br />
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Originally, the FLS scheme was scheduled to cease in January 2014.<br />
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Both the Bank of England and the Treasury have been working together on plans to extend the FLS in both time and funding to asset based lenders as well as leasing firms and invoice finance houses. This would ultimately help to ease the credit crunch felt by many small businesses across a number of industries.<br />
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For many small and medium enterprises, asset finance is their financial lifeblood. It provides cash flow by allowing companies to borrow against their invoices and equipment rather than build up bank debt through traditional business loans.<br />
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The announcement regarding the likely extension of the FLS, which comes this week, will also be seen as a direct response to the country’s GDP figures that show an overall economic growth by 0.1%.<br />
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Considered a success for the mortgage market, the modifications and extension to the FLS will likely give small businesses a much-needed boost. <br />
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Speaking about the FLA's past performance, Chancellor George Osborne stated that, “it has been a success and has underpinned credit in the last year and has contributed to a reduction in bank funding costs.”