Businesses benefit discounted loans

Date published: 10 October 2012


NatWest and Royal Bank of Scotland (RBS) have so far made over £1bn of discounted loans available to British businesses through the Government’s Funding for Lending scheme (FFL), with many in Greater Manchester benefitting from the bank’s best ever rates. More than half of that figure has involved lending to SMEs including over £23m in Greater Manchester.

In addition to interest rate cuts of up to 1.7% for SMEs, RBS and NatWest are the only banks to have abolished arrangement fees through the scheme with an average saving of £4,500 on the typical loan. The banks saw a 15% increase in applications for their discounted small business loan in the first month.

Chris Sullivan, CEO, RBS Corporate Banking said: “This is a real opportunity to stimulate growth in Greater Manchester and across the UK – the strongest way we can do this is to offer our best ever terms on SME loans. We hope this gives more businesses the confidence they need to invest."

The FFL scheme, available since 1 August, is being used by NatWest and RBS to cut interest rates on £2.5bn of SME loans by an average one percentage point. The cost of fixed rate lending for smaller businesses has dropped by up to 1.7 percentage points and arrangement fees have been removed on £2.5bn of new SME loans. The money is split across RBS and NatWest’s regional teams and is being managed locally to ensure all business communities benefit fully.

It is expected that £100m in total will be saved on the cost of borrowing over the life of the scheme. Smaller businesses are seeing bigger saving on taking fixed term loans for a loan of £250,000 fixed over 5 years the customer will save over £10,000.
RBS is also using the FFL scheme to provide a discounted fund for mid-sized manufacturers - these businesses, who turn over £25m to £500m, represent 30% per cent of the UK’s manufacturing base and are key in helping the UK grow and export out of recession.

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