You have probably heard about the recent announcements from the UK government about its new lending scheme designed to make borrowing a little easier for small to medium businesses throughout Britain.
The Royal Bank of Scotland (RBS) and Lloyds are two of the first high-street banks to really offer anything meaningful to business owners using this scheme. Both banks have redesigned their own lending schemes to be more attractive and beneficial to small businesses across the country.
At the time of writing, business secretary Vince Cable is still to announce all the details about the lending schemes, but what is on offer to small and medium businesses forms part of a new industrial strategy being deployed by the coalition government.
All this time the government has allowed SMEs in the UK to struggle and forced them to account for every penny, whether it is on consumables for their workforces or trying to find cheaper business electricity from sites like Make It Cheaper, businesses have really been hit hard.
So what is on offer for them now?
RBS has launched its own manufacturing fund which offers lower borrowing rates for businesses as well as variable loan rates for any amount between £250,000 and £25million.
There is also a further option to defer any capital repayment on these loans for up to two years. This could be an answer to many cash flow prayers of some small businesses as they look to build on their initial successes but are struggling to generate the capital to make it stick.
The other main bank, Lloyds, are running what they are calling a ‘Funding for Lending’ scheme, which also makes good use of the government’s overall scheme and also comes with a much more flexible loan amount.
Anything from £1,000 upwards is what you can borrow from Lloyds and it is not sector specific so theoretically it can cater to any size of business.
There also seem to be rumours of other high street banks preparing deals to help out smaller companies.
This is probably to show a friendlier face to a sector that has suffered very much at their hand since the economic downturn and some quarters possibly feel cut off and abandoned by the banks during that time.
These grants are aimed at making lending easier for businesses that historically have struggled to borrow any meaningful amounts. However, these changes and lending schemes do feel like ‘too little, too late’ for many of the small businesses who feel they could have done with such help at least a year ago, although it is a step in the right direction.
A spokesperson for makeitcheaper.com, a site designed to help SMEs save money, said: “Could the tide finally be turning for SMEs’ access to finance?
“In the past few days we’ve seen RBS and Lloyds launch their funding for lending schemes. At an SME event we hosted last week, Dr Cable said that businesses should be looking beyond the high street because the old fashion banking model is broken.
“He referenced Handelsbanken and Aldermore as being lesser known banks but perhaps more SME-friendly.”