Comment: SMEs losing out in bank lending battle LATEST figures for the government's flagship Funding for Lending Scheme (FLS) won't alter the widespread perception that it has been a boon for the mortgage market, but a damp squib for small businesses. Since FLS was launched by the Bank of England and the Treasury more than a year ago, Britain's lenders have used the cheaper money available to them to cut mortgage rates, lighten qualifying criteria, and offer more flexible loans to homebuyers. The scheme has helped pull the housing market out of a chronic trough, and revive the first-time buyer market. House prices have jumped again. But while some critics have said FLS has been tapped by high street lenders so much that it risks another housing "bubble" - which Bank Governor Mark Carney disputed last week - nobody claims the scheme has made any real impact on constricted business lending. The Bank's headline figure for FLS was £1.6 billion in the three months to the end of June, compared with an aggregate £4bn contraction in the previous two quarters. That is progress. But the bad news is that overall lending is down £2.3bn since June 2012, and net lending to small and medium sized businesses (SMEs) fell in the second quarter of this year. That cannot be dressed up as a glorious success story for the initiative in terms of the corporate landscape. The two score lenders participating still feel in their bones, one suspects, that loans to individuals and families are inherently safer in this climate than to businesses with plans to set up or expand. Clearly, there still isn't anything approaching a dynamic, fluid credit environment for those businesses, particularly smaller companies. And there is a growing disconnect between growing business optimism and this continued squeeze on credit. A raft of recent surveys have indicated a widening - if still modest - UK economic recovery. Manufacturing figures out yesterday showed the fifth consecutive month of expansion - maybe not George Osborne's fabled "march of the makers," but a circulation-raising brisker walk anyhow. The services industry, the high street, even that black sheep construction, have all shown recent progress. But FLS has failed to keep pace with this changing, more positive business marketplace. The scheme is not a failure, but qualified success is the most it can boast. Retailers may balk at high street levy idea RETAIL veteran Bill Grimsey, who risks being seen as Mary Portas on steroids in the race to save Britain's high streets, wants big national retail and leisure chains to pump 0.25 per cent of their sales - £550 million - into a fighting fund to rescue the sector. Chances look slim. Big retailers - hit by rising rents, business rates and the internet - are intent on conserving money, rather than throwing it at nebulous high street regeneration schemes ranging from car parking and charity shops to leisure and residential use. Grimsey's chequered record in management at the Iceland supermarket chain and DIY group Wickes is also not outstanding evidence that he is Messiah material. Portas, echoing Python, probably thinks he is just a naughty boy. The so-called Queen of Shops has been withering about his attacks on her alleged "nostalgia" in her own blueprint for recovery.