LONDON (Reuters) - Lloyds Banking Group (LLOY.L) opened a 500 million pound ($658 million) fund to help British businesses finance equipment on Tuesday, targeting small and medium-sized companies which banks froze out of credit following the financial crisis.
The bank said the fund will deliver quick access to finance by allowing companies to spread the cost of assets over their lifetime, enabling big investments that don’t eat into working capital.
The government sees small- and medium-sized companies as key to unlocking higher productivity, which has fallen back to below pre-crisis levels this year, and to the success of the UK economy post-Brexit.
These businesses have struggled to invest in the decade since the financial crisis as banks have shied away from lending to smaller businesses.
The Lloyds fund will be open to businesses of all sizes, but the bank said it would be of particular benefit to SMEs and mid-market companies in sectors with high and regular requirements for expensive assets, such as manufacturing and agriculture.
The bank is trying to boost its support for start-ups, smaller firms and productivity, including by increasing its net lending to SMEs by 2 billion pounds in 2017 - a target it missed last year by around 400 million pounds last year.
Out of more than 40 participating banks and building societies, it has drawn by far the most under an extended Bank of England scheme to encourage more lending, with the extension from 2014 until January 2018 focused on boosting lending to SMEs.
According to BoE data published in September, Lloyds had drawn 23 billion pounds under the extension followed by Santander, with 3.18 billion pounds.
A government drive to increase small businesses’ access to credit has seen improvements, but many still report difficulties.
In a survey of over 3,000 SMEs globally, published by American Express (AXP.N) in February, 57 percent of UK respondents said they struggled to access the finance needed to grow their business.
Reporting by Emma Rumney, editing by Alex Smith and David Evans