The scheme has also been expanded to include lending from banks and building societies to non-banks such as certain mortgage lenders.

Here’s all the latest reaction:

Paul Smee, director general of the Council of Mortgage Lenders welcomed the time extension and the indirect extension to include lending by non-bank mortgage lenders.

“We welcome the indirect extension of the scheme to non-bank mortgage lending too. Although non-bank lenders cannot access the scheme directly, any banks that lend to them will now be able to include that lending as eligible for inclusion in the FLS. This ought to result indirectly in the benefits of the FLS scheme being passed through to non-bank mortgage lenders,” he said.

Adrian Coles, Building Societies Association director general said two thirds of the FLS scheme users are already mutual lenders.

“According to the latest data from the Bank, two thirds of the participants to the FLS are mutual lenders, and net lending to the real economy by this group was plus £5bn in the second half of 2012, compared to – £6.5bn across all other FLS participants.

In good news for the mortgage market, he said: “Though welcoming the extension of the scheme, building societies are legally required to focus their lending on residential property so lending by building societies will continue to be predominantly mortgages to homebuyers.”

Stephen Sklaroff, director general of the Finance and Leasing Association, said: “The new incentives for SME lending, the inclusion of non-bank subsidiaries of participating banks, and allowing participants to lend to non-bank credit providers, ought in principle to help the leasing markets, which already support 750,000 UK small firms and 30% of UK business equipment investment.

“While it is clear a lot of work will be needed to implement these changes effectively, the extended scheme ought to help UK small businesses.”

Richard Sexton, director of e.surv chartered surveyors, said it remains to be seen whether this ‘beefed up scheme’ is strong enough to battle the ‘three-headed beast of high inflation, constrained funding for banks, and weak economic output.’

“Lenders have already warned the credit bottleneck is so clogged that even an extended version of FLS won’t be able to clear the blockage. It is still a welcome move, but it won’t be a game-changer,” he said.

“With any luck, lenders will use the cheaper funds to ease mortgage criteria and lower deposit requirements.”

Matthew Fell, CBI director for competitive markets, said: “Funding for Lending is already making a difference to the housing market and there are signs that it is starting to lower the cost of finance for business.”
He added: “We need to be realistic. Funding for Lending is only one piece of the jigsaw. Boosting firms’ confidence by raising awareness of the various funding schemes available is critical.”