Some of the more famous British high street banks are changing their ways in an effort to become more SME friendly. Some examples of the banks looking to reform are RBS, which also includes NatWest and Lloyds Bank.
RBS has always had a fund specifically for manufacturing companies but was generally unable to offer a large amount of investment to smaller businesses.
Vince Cable, Business Secretary, recently launched the Government’s Funding for Lending Scheme that has allowed for banks of this nature to really give the best rates they can to start-up businesses.
The Government’s involvement with private bank firms stems from their new industrial strategy, an initiative that attempts to bring manufacturing back to this country and in turn, the profits it reaps as well as the job opportunities created by enhanced manufacturing presence in the country.
RBS is now able to offer the same great rates to their smaller SMEs as they would to larger companies creating an environment where start-up businesses are encouraged to stay in the UK.
They offer accessible funds for any business that is looking to bring in between £25 and £500 million a year. SMEs are now able to borrow between £250,000 and £25 million from the bank with variable payback plans.
Peter Russell, Head of Manufacturing at RBS had this to say regarding the situation, “Through Funding for Lending, these are the most competitive terms that we have been able to offer manufacturers for several years”.
RBS is also quoted to saying that SMEs in the manufacturing sphere will also have the advantage of being able to defer any capital repayments for up to two years.
Lloyds Bank on the other hand has launched their own version of the SME friendly investment initiative with their “Lloyds Funding for Lending”. This scheme also takes advantage of the Government’s Funding for Lending arrangement.
Unlike RBS, Lloyd’s version is not specific to a sphere of business and offers any SME a minimum loan amount of £1000 at a 1% lower rate for new businesses with no maximum limit at all.
Mark Stokes, Managing Director of mid markets at Lloyds Bank Wholesale Banking & Markets described their version of the scheme “As part of our commitment to help Britain prosper” he also added, “We are determined to provide simple, transparent and competitive funding to ‘UK PLC,”.
Even the recently scandalous Barclays Bank looks like it may be up for a reform as the new boss Anthony Jenkins told the BBC that he will be “quick and bold in making reforms at the bank”, an obvious attempt to rebuild the banks’ shattered reputation.
An SME event was hosted last week by Make It Cheaper, in which Dr Cable implied his lending scheme is loosely based on one that has demonstrated some success in Germany. Cable also explained to attendees that SMEs should perhaps look further than High Street banks to lesser known banks such as Handelsbanken and Aldermore who are more SME-friendly.