By Daniel Hunter
The Bank of England have confirmed that lending to businesses in the UK has fallen by a further £4.8 billion in the three months to February.
The figures represents a fall of 4.4% in loans to companies and small firms from the same period a year earlier. The Bank also said that the mortgage market was "broadly unchanged".
Figures from the Council of Mortgage Lenders (CML) paint a similar picture, with lending in the first quarter of 2013 the same as last year.
The Bank of England also said that those banks participating in the Funding for Lending Scheme (FLS) were lending less money overall to households and businesses in the second half of 2012 than they were in the previous six months.
FLS was launched in August last year. The idea is that banks and building societies can borrow money from the Bank of England at low cost, providing they pass it on to businesses and individuals.
"The Funding for Lending Scheme has let Britain's businesses down. For all its financial firepower, the scheme has failed to unblock the credit pipeline," Christopher Shaw, CEO of the alternative finance provider for business, Platform Black, commented.
"Bank lending to business has moved from decline into freefall. Net lending in February sank to levels not seen since 2010 - and not far off those seen in the depths of the credit crunch.
"The FLS may have persuaded the banks to offer more mortgages, but most of the mainstream banks remain unwilling or unable to lend to business.
"Some banks' risk aversion has become endemic, and most won't consider lending to a business without significant assets and security.
"In many cases, even when companies are offered loans, the terms can be so prohibitive that they are just not practical.
"This is inhibiting business growth and limiting the wider economy's ability to recover. If next week's GDP figures confirm that a triple dip has been avoided, it will be no thanks to the banks.
"The Funding for Lending Scheme is a fine idea in principle - but for now it is little more than that.
"The banks' continued unwillingness - or inability - to lend to businesses has led ever more companies to seek funds from alternative finance providers. Large companies are issuing corporate bonds in record numbers, and SMEs are discovering that there is now a kaleidoscope of other options available, from crowdfunding to invoice finance.
"The banks still have a vital role to play oiling the wheels of British business, but their monopoly on lending is gone for good."
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