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RBS woos small firms with £1bn loan package

Royal Bank of Scotland today makes another attempt to persuade small firms that it is providing the support and funding they need with the launch of a £1 billion package of fixed rate loans.

Firms wil be offered between £1,000 and £250,000 with no arrangement fee and is promising to provide decisions in 90% of applications within five days.

The fund will be distributed across the UK by RBS and its NatWest subsidiary over eleven regions and will target new and existing customers who are “looking to grow or diversify their business”. Scotland’s share of the new fund is expected to be in the region of £140m.

It is the latest move by the banks to offer fixed rate loans. HSBC also provides a package of between £1,000 and £25,000 for up to 10 years.

The new fund comes amid continuing concerns that overall lending continues to decline. Lending to small and medium-sized firms (SMEs) via the government’s Funding for Lending Sscheme (FLS) fell again in the second quarter of the year.

The Bank of England said in August that net lending, which takes account of repaid loans, to SMEs dropped by £435m.

RBS says the new fixed rate fund is well-timed ahead of a potential increase in base rates which many analysts believe will come next year.

A week ago the bank offered support to entrepreneurs and high growth businesses via a new network of eight business accelerator hubs that will offer free workspace, hands on mentoring, a start up ‘bootcamp’ and a free programme of up to 18-months of advice, support and funding clinics.

Les Matheson, who heads up personal and business banking at RBS said the fund was further evidence of the bank “backing the businesses of tomorrow”.

The move will be seen as a response to criticism of the bank’s lending policies in a report by Sir Andrew Large, a former deputy governor of the Bank of England, although he refuted claims by former government adviser Lawrence Tomlinson that it was pushing businesses into default.

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