Small businesses may get additional relief from the woes of seeking funding, if today's Sky News is anything to go by. According to the news channel's website, the Treasury could this week announce an extension of 1 or 2 years to the Funding for Lending Scheme (FLS), which is currently due to end in January.
Sky also reported that sources expect Chancellor George Osborne to go public with the news in the Autumn Statement this Wednesday (25 November). Although the Treasury declined to comment on the rumours.
Funding for Lending's aim
Launched in 2012, the FLS aims to boost the UK's economy by encouraging high street banks to lend an additional £70 billion to businesses. However, the debate continues as to whether it's been a success, with many SMEs still struggling to secure loans from traditional lenders.
SMEs are increasingly securing capital from the alternative finance sector, which is now lending an average of around £211.5 million a month.
George Osborne on FLS
When the last extension was announced in late 2014, Mr Osborne said the scheme was to support a major driver of the UK's economy:
Now that credit conditions for households and large businesses have improved, it is right that we focus the scheme’s firepower on small businesses, which are the lifeblood of our economy. That’s also why we’ve reformed the banks, introduced the British Business Bank and are now focussing the Funding for Lending Scheme on supporting them.
George Osborne, Chancellor of the Exchequer
Impact on altfi?
The alternative lending sector will no doubt be interested to see whether an extension could impact the strong trend of smaller enterprises using sources like peer-to-peer, crowdfunding and specialist lending to get growth and startup funding in 2016.