Factoring and invoice discounting to be included in the Funding for Lending Scheme (FLS)

Factoring and invoice discounting companies are to be included in the Bank’s flagship Funding for Lending Scheme (FLS), which is also expected to be extended by a year to 2015.

Invoice finance is the lifeblood of many small and medium sized companies as it is the main alternative to bank borrowings in providing cash flow for working capital, by allowing them to borrow against invoices.

The Chancellor is hoping the new arrangements will boost confidence and investment in a sector that accounts for 14m jobs – almost half of private sector employment – but has been starved of capital although I must admit that I’m not sure as whilst the Banks seem to have been loathe to lend, the factoring companies have been falling over each other to push money out of the door but companies have been loathe to sign up despite rates being at a historic low level.