The latest data for the Funding for Lending Scheme reveals that it is at last reversing its dismal performance in 2014.

Net lending under the FLS fell quarter by quarter during 2014, resulting in a net decline of £2 billion. The alternative finance sector did what it could to plug at least some of this gap, with peer-to-peer lenders facilitating SME loans totalling £967 million last year, but there was no prospect of them closing it completely.

By contrast, FLS numbers for Q3 2015 show net lending to SMEs climbed by £675 million during the quarter, representing the largest expansion in FLS funding since Q1 2014. The net rise in SME lending for 2015 under the scheme stands at £1.765 billion, indicating a measurably improved credit environment for UK SMEs.

Figures from altfi.com show that peer-to-peer lenders facilitated loans to businesses of £422 million in Q3, the largest quarterly lending volume from these platforms to date, bringing the SME lending total to £1.86 billion.

While FLS has helped improve the credit landscape for SMEs, the figures suggest that it has yet to drive substantial rises in net lending, largely because it does nothing to simplify the cumbersome bank lending process. New forms of innovative finance are growing largely because they do solve this problem, offering a better all-round experience to SMEs. Peer-to-peer lender Unbolted, for example, offers SMEs a secured asset loan model: facilitating fast loans at highly competitive interest rates and without intrusive credit searches. Borrowers place a valuable personal asset under the control of the platform, which collateralise the possession as security for the loan.