Bank of England data shows that net lending by banks taking part in the Funding for Lending scheme remains "broadly flat", despite its best efforts to ease the flow of cheap credit to hard the real economy.

According to the BoE's FLS figures for the second quarter, Chancellor George Osborne's flagship credit easing initiative saw net lending by participant banks increase £1.6bn over the three month period.

This is stronger than net lending by non-participant banks, which saw a -£2.1bn fall in net lending.

"The FLS is continuing to support lending to the UK economy with a range of indicators suggesting that credit conditions are steadily improving for households and firms," said Executive Director for Markets at the Bank of England, Paul Fisher.

Despite the broadly flat pattern of loans which the data shows, Fisher said that FLS participants expect net lending to pick up over the remainder of 2013.

In April, Osborne extended FLS to skew the incentives for banks towards SME lending.

Overall FLS Impact Yet to be Seen

There have been varying impacts of the FLS across the UK economy. Aggregate net lending for individuals edged up slightly in the second quarter and mortgage approvals for house purchases was slightly better as well.

But the influence of the FLS on small and medium-sized businesses is mixed, according to survey evidence from the Federal of Small Businesses (FSB).

The FSB believes that SMEs could be missing out on cheaper finance as 61% of firms have not heard of FLS.

The business organisation welcomes the £17.6bn taken out by of FLS in total by banks since it began, but indicated that more needs to be done to make credit available to small firms.

"With many firms unaware of what FLS is we want to see an increase in communication that the banks are open for business," said John Allan, national chairman of the FSB

Allan added that he hopes that banks target their lending to the needs of small businesses so that they will get the credit they need.