Question

To ask the Secretary of State for Business, Innovation and Skills, what assessment his Department has conducted of the adequacy of the level of financial support offered to small businesses that have been in operation for two years or less; and if he will make a statement.

The Government recognises that new businesses can encounter difficulties in obtaining the finance they need to start-up or grow. However I am encouraged that net lending to smaller businesses has been recovering strongly since the end of 2014. The Bank of England has reported that credit conditions for SMEs seeking finance are improving and the SME Finance Monitor shows that 80% of SME loan and overdraft applications were successful in the 18 months to 2015 Q3, up from 68% in Q4 2013.

Latest figures show that net SME lending from banks participating in the Funding for Lending Scheme grew by £675m in the third quarter and the Bank of England recently announced that allowances earned by banks for increasing their net lending under the scheme will be available to draw down for a further two years. The government also continues to fund start-up loans, with more than 33,000 loans worth over £180 million issued so far and a target to deliver 75,000 loans by the end of the parliament.

I am also encouraged by our growing alternative finance sector, with the UK the leading fin tech centre of Europe.

A recent report from the Legatum Institute rated the UK as the best country in the EU in which to start a business and the government will continue to back our small businesses to start and grow.