The Chancellor, George Osborne, is expected to increase the Funding for Lending Scheme (FLS) over the coming weeks to provide a boost in lending to small businesses.
Since the Government initiative launched last August, levels of lending to individuals has shown a marked improvement, with the 40 participating mortgage lenders slashing rates to record lows.
Research by Moneyfacts.co.uk found average two-year fixed mortgage rates have crashed from 4.60% in April 2012 to 3.83% to day, as lenders clamber to take advantage of lower funding costs under the scheme.
Small and medium-sized businesses (SMES) have failed to follow suit, however, with recent Bank of England figures revealing that SMEs remain reluctant to borrow compared to their larger counterparts.
Low borrowing by SMEs prompted calls from the Treasury's Monetary Policy Committee for Mr Osborne to increase the availability of cheaper credit via the FLS, whilst the Chancellor also faces pressure from the International Monetary Fund (IMF) to prove that his austerity measures are proving effective.
Whilst it is not known how large the proposed extension will be, it is anticipated to take place prior to the IMF's visit to the UK in May to assess the state of the UK economy.
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