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Govt set to extend Funding for Lending for another year

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The Government is set to extend the Funding for Lending scheme for another year to the end of 2014, according to reports.

Funding for Lending was introduced in August 2012 and is due to last until January 2014. The scheme offers banks and building societies cheap loans in exchange for commitments to expand lending to mortgage borrowers and SMEs.

The FT reports the Bank of England will extend the scheme until the end of 2014 in an announcement tomorrow in a bid to boost business lending.

The Bank is also believed to be in talks to extend Funding for Lending to include invoice finance houses, leasing firms and asset finance groups.

The changes are in response to criticism of the scheme after net lending for mortgages and businesses dropped £2.4bn in Q4 2012, the first quarter the scheme was active.

The Treasury select committee has also criticised Funding for Lending for a “bias” towards mortgage lending.

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