RBS will aim to boost small business lending by at least 15 percent in three months as part of a drive to get behind the economic recovery.
It will make what it says is its best ever offer to small business customers by eliminating upfront fees, offering a low rate and ending early repayment penalties on fixed rate small business loans.
The offer comes at a time when there are fears that the economic recovery is stalling and small businesses have increasing concerns about growing n the face of significant uncertainty.
Chris Sullivan, Chief Executive of RBS Corporate Division said:
“A circuit breaker is needed to restore confidence for small businesses, that’s what RBS is hoping to provide.
“We’ve set an ambitious target of 15 percent in the next 3 months, and we’re backing it up with our best ever offer to small firms.
“This economy needs confidence and there is no bank that is better placed to give it than RBS and Natwest.”
RBS will need to lend an additional 10% to recover the costs of the initiative, showing that it is taking a risk to back the UK’s economic recovery at a crucial time.
The offer, to RBS and NatWest customers, will save around a quarter of the cost of fixed rate loans up to £250,000.
A business borrowing £75,000 – the average small business loan – will save as much as 60 percent on the cost of the loan over three years, and face no penalties for early redemption.
Key aspects of the new loan offer:
- Available for a trial period of 3 months from today for loans from £25,001 up to £250,000 (similar terms are already available for loans under £25,0000
- No upfront payment of a fee to set up the loan, resulting in a discount of up to 1.5% (our normal arrangement fee level)
- For existing and new business customers
- Fixed rate – the customer has no risk to interest rates movements over period of the loan.
- No early breakage fees – a major change given early repayment fees are often an area of irritation for customers. The offer is in addition to a guarantee in place for SMEs for the past two years to renew overdrafts at the same rate, and discounted lending for the franchising and manufacturing sectors.
- Figures published today by RBS show the bank lent around £15bn to SMEs in the first half of this year. More than 40% of all SME lending for the year.