RBS Group and Nat West sign up to government scheme promoting better lending terms for SMEs
NatWest and the Royal Bank of Scotland Group plc have announced that they will use the new Bank of England Funding for Lending scheme to offer better lending terms for SMEs and individuals.
Beginning in August, and running for 18 months, Funding for Lending is a multi-billion pound scheme designed to provide more – and cheaper – loans and mortgages for borrowers. The scheme essentially makes low-cost funds available to banks and building societies which they, in turn, pass on to the end user.
Initially, banks will be able to borrow 5% of the amount they currently lend, which will increase proportionately if their lending increases. However, penalties may become payable if financial institutions cut their lending, despite being given access to cheaper funding.
Chancellor George Osborne said he hoped it would support households and businesses "at a challenging time".
Adam Marshall, policy director at The British Chambers of Commerce (BCC), gave the scheme a cautious welcome:
"We will be watching closely to see if this has any positive impact for new and growing businesses, which have largely been frozen out of the market for finance in recent years," he said.
"As [the BoE and the Treasury] roll out Funding for Lending, they should be even more radical and plan for the creation of a bona fide business bank in the medium to long-term."
However, Chris Leslie, Labour shadow Treasury minister, said the plan did not go far enough:
"To address the biggest problems in our economy... we need a change of course from the government on tax rises and spending cuts, which go too far and too fast,” he said.
"Only a credible and balanced plan for jobs and growth that gets our economy moving again and people back to work will succeed in getting the deficit down.”
To find out more about the scheme, visit fundingforlending.co.uk, http://fundingforlending.co.uk/]