The net lending of banks taking part in the Bank of England’s Funding for Lending Scheme (FLS) to households and businesses totalled £1.6 billion during Q2 – an improvement on the previous quarter. According to the Bank of England, banks and building societies have accessed £17.6bn of cheap funds through the FLS initiative. However, net bank lending is still £2.3bn less than it was in June 2012, showing that the scheme still needs to get better.

The Q2 results provide stakeholders with a measure of optimism that the British economy is slowly but surely getting back onto its feet. The announcement also arrives off the back of a Bank of England report from last week indicating that loans in general had increased to 1.3bn during July.

Unveiled in August last year, FLS is a creation of the Bank of England (BoE) and Treasury to boost lending to households and companies by up to £70bn, allowing banks access to cheaper forms of credit that can then be passed on to customers. Paul Fisher, BoE executive director for markets, said that FLS is successfully supporting lending to the UK economy, with a range of indicators suggesting that credit conditions were steadily picking up for households and companies.

However, some economists have raised doubts over the impact of FLS on credit flow – especially with regards to funding SMEs. Phil Orford, chief executive of advocacy group the Forum of Private Business (FPB) said:  “Despite awareness of schemes such as FLS and an appetite to borrow, businesses are still under the impression that the banks are still not willing to lend, and this perception gap risks disabling the access to finance that is vital to support growth and getting Britain trading at pre-2008 levels.”

Orford added: “My message to the banks is we can’t afford for progress to wither. Banks must be proactive in providing the liquidity the economy needs and promoting awareness of – and access to – the financial mechanisms in place to support lending.”

Alongside conventional loans, crowdfunding has become an increasingly viable alternative source of loans for many businesses over the past five years. Just recently, Social Foundation boss Barry E James, and Huddersfield MP Barry Sheerman wrote to Chancellor George Osborne to express the benefits of the system, which allows everyday people to invest in start-up companies.