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Funding for Lending Scheme

Launched on 13 July 2012 by the Government the Funding for Lending Scheme's (FLS) aim is to boost lending to households and businesses.

The scheme will allow banks and building societies to borrow from the Bank of England for up to four years providing mortgages and loans as security.  The scheme runs for an 18 month period from 1 August 2012 until 31 January 2014.

In order to assist banks and building societies to lend the FLS will be monitored the scheme to incentivise lending, the more lent the more than can be borrowed for the Bank of England and at a lower interest.  Hopefully this positive cycle will encourage greater lending.  As there is no 'upper' lending limit for an individual or aggregate bank or building society the limits will be due to how much is lent to householders and business and the amount of collateral provided to the Bank of England.

The Bank of England will be publishing their FLS lending data together with the lending data from the banks and building societies using the scheme.

The FLS replaces the National Loan Guarantee Scheme launched in March 2012 which had the intention of lowering the cost of business loans to Small and Medium Sized Entities (SMEs) is delivering promising early signs.

Currently the FLS has been taken up by 13 financial institutions representing 73% of the market and £1.2 trillion worth of lending:

  • Aldermore
  • Barclays
  • Hinckley & Rugby Building Society
  • Ipswich Building Society
  • Kleinwort Benson
  • Leeds Building Society
  • Lloyds Banking Group
  • Monmouthshire Building Society
  • Nationwide Building Society
  • Principality Building Society
  • RBS Group
  • Santander
  • Virgin Money

How the scheme works

For details of how the scheme works, the Bank of England have provided a helpful guide together with a worked example.

Visit the website for the scheme

Last updated: 29 Nov 2013