Amigo Loans Comments On Extension To Funding For Lending Scheme
Press Release - 24 April 2013
James Benamor, founder and CEO of Amigo Loans comments:
“Today’s news that the Bank of England will be extending the Funding for Lending scheme for another year comes with good intentions but still won’t be enough to secure lending for struggling small businesses and individuals, who can’t get access to traditional bank funding. Past Funding for Lending figures have proved the scheme just hasn’t lived up to its promises to boost SME lending, with banks still far too dependent on computerised credit scoring.”
“This scheme was originally introduced to give the economy a much needed boost and give banks the push they needed to start lending again but it clearly hasn’t worked so far, so now the question remains – will it be any different this time round? The Treasury’s new incentive measures of allowing banks to borrow an extra £5 from the scheme for every £1 they lend to an SME, and then up to £10 in 2014, when the scheme is extended, should make a difference in theory but the proof is yet to be seen.
“Many small businesses and individuals are unaware of the other forms of credit available to them, so once their bank rejects them they will often go to the other extreme and head down the payday route. We know from our own research1 that one in six who had been turned down for a bank loan have resorted to a payday loan to fund their business venture.
“The UK desperately needs a return to the old-fashioned values of lending from credit unions and alternative lenders such as ourselves. At Amigo Loans we offer an old-fashioned lending model, widely used by banks before the local bank service was replaced by computerised credit scoring. Our lending is based on trust, personal endorsement and one-to-one interviews. An Amigo loan gives borrowers the chance to rebuild their credit score, instead of damaging it through the use of payday loans.”