Lending to SMEs under the government’s Funding for Lending Scheme (FLS) rose by £500 million in Q2 2015, according to the Bank of England.

The latest figures are slightly lower than the £600 million increase in Q1 2015 but are an improvement on 2014 which saw lending under the FLS fall.

Banks and building societies that participate in the FLS can borrow from the Bank of England at lower than market rates. This is intended to encourage them to pass on cheaper lending to businesses.

Dr Adam Marshall, executive director of policy and external affairs at the British Chambers of Commerce, said:

“Over recent years lending to SMEs has consistently fallen, so it is welcome news that net lending over the first half of this year is bucking the trend.

“However, our business finance system is not where it could or should be, and some of our most promising young companies still struggle to get the finance they need to grow.

“If these firms are to reach their full potential we need to see greater competition in banking, improved access to non-equity finance and a British Business Bank that is scaled up to support the ambitions of our future wealth creators.”

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