Apr 05, 2013 Simon Williams
The Bank of England recently released survey results that put yet another damper on the already unsuccessful Funding for Lending Scheme (FLS).
"The BoE data . . . suggest that credit and housing remain weak, and that despite the FLS, credit availability for small firms remains particularly poor," Michael Saunders, an economist at Citi, told the Financial Times.
United Kingdom-based small and medium-sized enterprises (SMEs) have struggled since the start of the recession, and unlike in the past, banks haven't been able to relieve their woes. The FLS was meant to spark short term lending for the SME sector, but that goal doesn't appear to be coming to fruition.
As a result, alternative lenders are starting to make headway in the United Kingdom. PayPal, for instance, is starting to provide funding for SMEs by using similar strategies to those that have worked with consumers, the Irish Independent reported.
"We've done it successfully with credit, and we are experimenting with many new capabilities which will drive share like small business lending," said Gary Marino, senior vice president of global financial services at PayPal.
Alternative short term lenders are rapidly gaining popularity in the U.K., largely because they use different scoring methods to determine whom to lend to, such as Payment Reporting Builds Credit.