By Claire West
The Federation of Small Businesses (FSB) believes small firms could be missing out on cheaper finance as new figures shows around two thirds (61%) of firms haven’t heard of Funding for Lending (FLS).
Results show an increase in lending for the first time through FLS, a £1.6 billion rise of net lending the main high street banks. While this is welcome news the FSB believes more needs to be done for businesses to have loan applications accepted.
While £17.6 billion than has been taken out of the scheme in total by the banks and lending over the scheme is relatively flat, the FSB is pleased that the data shows the price of finance has begun to fall.
The survey shows less than a third (29%) of respondents are aware of FLS. The FSB wants to see the communication about availability of cheaper finance stepped-up by the banks.
The FSB is hopeful the Government’s Business Bank will oversee improvements in communication between banks and small businesses and offer guidance on focusing government-backed schemes, to the specific needs of small firms before January 2015.
FSB research also shows alternative sources of finance are not widely knows, as the survey also reveals that less than four in 10 aware of being able to borrow from alternative or specialist lenders such as peer-to-peer or asset finance providers.
John Allan, National Chairman, Federation of Small Businesses, said:
“Many small businesses have been affected by the lack of access to financial support during the financial recovery and have relied on non-bank lenders to keep them afloat. We hope the small increase in lending from Funding for Lending (FLS) continues to build. However, with many firms unaware of what FLS is we want to see an increase in communication that the banks are open for business.
“We hope the increase in competition from non-bank lenders in the scheme will continue to deflate the cost of borrowing and boost lending to small firms. Only when the banks tailor their packages specifically to certain sectors and improve the way they advertise those products to small businesses, will small firms get the finance they need.”