Syscap: Funding For Lending scheme failing SMBs

Independent finance firm says interest rates still too high for small companies despite government business loan scheme

The government's Funding for Lending (FFL) business loan scheme is failing small businesses, according to finance provider Syscap.

The firm said that while the strategy, which was set up in August, may have lowered costs, SMBs are still missing out because the loans being offered to them are "more capital intensive".

Despite the launch of the government scheme, which aims to make cheaper loans available, interest rates on loans of less than £1m continued to rise in the quarter ending 30 September, going up from 3.76 to 3.85 per cent, according to Syscap.

Philip White, Syscap's chief executive, said opening up the FFL to the leasing sector would be a "quick and effective step to take in helping small businesses".

He added that including the leasing sector would help to ensure FFL does not go the same way as other initiatives, which he claimed have "tried and failed" to aid SMBs.

"After more than four years of serious attempts to stimulate bank lending, no scheme has managed to have a substantial impact on lending to small businesses," he said.

"The Enterprise Finance Guarantee and National Loan Guarantee schemes have already tried, and failed, to make finance more widely available to SMBs at affordable rates. The government must ensure that Funding for Lending does not turn into a missed opportunity like they did."