The Bank of England has recently granted £1 billion to Lloyds, in order to make it easier for them to lend to small businesses, as well as people who want to borrow for a mortgage.
The money has been gained from the Funding for Lending Scheme, which was organised by the government, and the bank have been able to secure a large amount of money for this. The idea behind the loan is that it is going to make it easier for the bank to give affordable credit to people who might not be able to afford loans otherwise.
The Bank of England believe that one of the main reasons why growth has been so limited in Britain, since the recession began, is because of the limited availability of finance. Some officials believe that people are afraid of taking on extra risk through loans, and the expense of these has also meant that people are reluctant to take out loans, which is stifling growth.
Since the financial crisis began, and the bank had to be bailed out, it is now 40 percent owned by the taxpayer. Since the lending packages have been received from the government, the bank of stated that they are going to be making finance more available for SME’s, and mortgage seekers almost immediately, with plans being put into effect within the next week.
Over £6.5 billion has been lent by Lloyds bank to small businesses in the first half of the year, and even smaller firms have been particularly benefited, with lending figures increasing nearly 5 percent over the same period for 2011.
The idea behind the whole scheme is that it is going to improve the economy in the UK, and stimulate growth to continue, something that is definitely needed, in order to bring the country out of the financial recession which has been continuing for several years.