RBS offers funding to small businesses

After criticism over the difficulties small businesses have had in obtaining much needed funding, the Royal Bank of Scotland (RBS) have announced that they plan to radically improve the borrowing terms for the 1.2 million small businesses it currently services. 

As of this week, RBS has planned to cap overdraft charges at 1.5% for any business with a turnover in excess of £25 million. In addition to this, RBS will cap loan arrangement fees for small businesses at 1.5% and renew lending on the same or improved terms for a minimum of 12 months.

RBS are also said to be offering free banking services for all new business start-ups. Prior to this, NatWest was the only other bank offering the same service.

A spokesman for the Royal Bank of Scotland said that the bank is currently funding new businesses at a rate of 2,000 per week, and that they are now leading the way among high street banks in providing access to funding for UK businesses. He went on to say that RBS has £27 billion in undrawn overdraft facilities available to small businesses, but that these have not been taken up as yet.

The Confederation of British Industry (CBI) which has argued that a lack of funding is the biggest obstacle to UK businesses during the downturn, and the Federation of Small Businesses (FSB) have both applauded the act. The FSB’s head of public affairs, Stephan Alambritis, stated that:

“Businesses need to know that their credit lines are safe and how much they will cost. Commitments to guarantee overdrafts ... and commitments to transparency are a real help. We want these to make a real difference to the small business sector.”