Reform is on the cards for some of the more famous high street banks in Britain. Lloyds Bank and RBS seem to at the head of the trend that is allowing for greater and more accessible funding for up and coming SMEs (Small and Medium Enetrprises).
The change has come following the recently launched scheme under the moniker ‘Funding for Lending’. Business Secretary Vince Cable assures the business sector that the new initiative will look after the needs of the small and medium business owners.
The overall new industrial strategy being plugged by the government is what seems to be underpinning the move that has freed banks us to lending to smaller possible investment companies. A higher level of manufacturing in this country for example would create more jobs and retain funds within Britain as opposed to seeing money drip into countries where there is cheaper labour.
There has been a funding for manufacturing incentive within RBS for years now but it generally existed mainly for the needs of large global manufacturing firms. The new government scheme has allowed RBS to start lending to much smaller businesses.
SMEs are now being offered the same if not better rates than their global counterparts and are offering funds to any start up with a projected earning of £25 and £500 million a year. Small and medium businesses are being offered from £250,000 to £25 million from the bank with variable payback.
Head of Manufacturing, Peter Russell at RBS admits that“Through Funding for Lending, these are the most competitive terms that we have been able to offer manufacturers for several years”.
While RBS are concerned mainly with the manufacturing firms,Lloyds Bank has taken the reform as more of a holistic exercise. The “Lloyds Funding for Lending” is offering small businesses of any genre minimum loans of only £1000. The rate 1% lower rate for new businesses and there is no maximum to speak of.
From the Lloyds Bank camp, the Wholesale Banking & Markets MD, Mark Stokes, explains that the scheme “As part of our commitment to help Britain prosper” adding,“We are determined to provide simple, transparent and competitive funding to ‘UK PLC”.
Business Secretary Vince Cable attended a makeitcheaper.com seminar for SMEs recently and divulged his mimicking of a scheme that worked quite well in Germany. He also reminded SMEs there are viable alternatives to the high street, mentioning Handelsbanken and Aldermoreas examples.