SMALLER firms in the North-East must be given greater help to access finance and support their growth, a business organisation has said.

The North-East Federation of Small Businesses made the plea after figures showed lending to small and medium-sized companies through the Government’s Funding for Lending Scheme (FLS) fell again.

The Bank of England said net lending, which takes account of repaid loans, shrank in the second quarter by £435m.

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The FLS scheme was launched in 2012, giving banks and building societies access to cheap finance in return for lending to households and businesses, and was later revamped with a skew towards small firms.

Reacting to the figures, Ted Salmon, North-East chairman of the Federation of Small Businesses, said: “Small firms are increasingly confident across every sector, and in every region.

“But these new figures again show growth ambitions are not being translated into demand for finance, especially for smaller businesses that have not been able to capitalise on cheaper credit.

“While FLS has had an impact on the price of credit, the trend in lending suggests there remain issues with credit allocation through the banks.

“That is why we believe the Competition and Markets Authority needs to review the market, ensuring that competition is working in the sector and that firms can access the finance they need to grow.

“Alongside the traditional banking market, efforts are needed to scale up and promote alternative finance providers so ambitious firms have other finance options.

“Government calls for banks to refer rejected loan applications to alternative finance providers are a welcome move.

“However, these alternative providers need access to credit data so they can make effective lending decisions.”