During the second quarter of 2015, the number of groups participating in the FLS extension was 34. Of these, 11 participants made drawdowns of £5.1bn in total. Participants also repaid £0.9bn, taking total outstanding drawings to £61.4bn.

However, net lending by FLS extension participants to SMEs was £500m in the second quarter of 2015. This compares with the previous quarter’s total of £600m.

The Bank of England ‘s analysis shows that aggregate net lending to SMEs (i.e. including lending by banks and building societies not participating in the FLS) was positive in 2015 Q2, and the  bank says the annual growth rate in the stock of lending to SMEs became less negative, continuing the trend seen over the last few years.

The survey commentary says there is some evidence of further loosening in 2015 Q2, although at a very marginal rate. 

For example, the Federation of Small Businesses’ Voice of Small Business Index reported that credit availability for small businesses increased slightly in 2015 Q2, continuing its recent gradual improvement. 

In addition, respondents to the Bank’s credit conditions survey reported that both credit spreads and fees and commissions on lending to medium-sized companies had fallen significantly in 2015 Q2, although they were little changed for small firms. 

Under the amended FLS extension scheme, participants retain borrowing allowances earned by lending from 2013 Q2 to 2014 Q4, and are able to earn further allowances by lending to SMEs in 2015. Lending to SMEs is encouraged by allowing participants to draw £5 in the scheme for every £1 of net lending to SMEs. Participants in the FLS extension are able to make drawdowns up to the end of January 2016.

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