Bank lending scheme for small business
Published: 29 March, 2012
LONDON: The Government has launched a £20bn scheme to boost bank lending to small and medium-sized enterprises.
Under the scheme, firms with an annual turnover of up to £50m will be able to access loans with interest rates a percent lower than those available outside the initiative.
Barclays, Santander, Lloyds and Royal Bank of Scotland have so far signed up.
John Walker, national chairman of the Federation of Small Businesses, said: "Recent FSB research indicated that around 60% of small firms believed that credit is unaffordable and so this scheme should help reduce that burden.
"What we now need to see is clear communication to small firms and bank branch staff so that everyone is aware of it, and how it will work, so that businesses can benefit from it."
RBS is expected to be the biggest user of the scheme because it has the largest share of UK small business banking, and its borrowing costs are relatively high. It is expected to provide around a third or £1.5bn of the initial batch of cheaper loans and will direct this finance towards businesses with turnover up to £5m. RBS will provide loans as small as £1000.