The Treasury pledged £400m to extend government-backed venture capital funds which invest in fast growing SMEs, called Enterprise Capital Funds, and said it would guarantee up to £500m of new bank lending to SMEs.
The Funding for Lending scheme to boost bank lending to firms will also be extended for another year.
Mark Carney, Governor of the Bank of England said:
"By providing a backstop for funding for banks, the FLS has supported access to credit across the economy during an exceptional period. As the banking system has been returned to health, the need for that backstop has been reduced. The Scheme is not permanent so, as access to credit has returned to the mortgage market and large corporations, the Scheme has been tapered appropriately. The extension announced today concentrates the FLS on the one area where support remains warranted: the supply of credit to SMEs."
George Osborne, Chancellor of the Exchequer said:
"The government’s long-term economic plan is working with the Funding for Lending Scheme playing a vital role in supporting the recovery. Now that credit conditions for households and large businesses have improved, it is right that we focus the scheme’s firepower on small businesses, which are the lifeblood of our economy. That’s also why we’ve reformed the banks, introduced the British Business Bank and are now focussing the Funding for Lending Scheme on supporting them."
