From 1 August UK entrepreneurs will benefit from an average 1% cut in interest rates, under a new lending scheme announced today by RBS and NatWest.
Stimulated by the Bank of England’s Funding for Lending programme, announced in the March Budget, the move will see RBS and NatWest offer what they claim to be their best ever interest rates to small businesses.
Up to £2.5bn of small business loans will see interest rates fall by an average 1% and fixed rate loans will see a 1.6% reduction.
Furthermore, the arrangement fees on £2.5bn of new business loans will be removed – saving entrepreneurs an estimated £40m in fees.
The scheme will be strategically implemented across the country, to ensure all regional and local business communities benefit – with more than £100m expected to be saved over the life of the scheme.
RBS and NatWest Corporate CEO Chris Sullivan said his company is “determined to play their part in supporting the economic recovery.
“The clearest and strongest way we can do this is by letting people know that we are open for business and ready to support their ambitions on the best terms available.”
However John Longworth, director general of the British Chamber of Commerce argued: “The real test is whether Funding for Lending will reach those parts of the real economy that need it most: the fast-growing and new businesses that we rely on for jobs and exports.”
The average £100,000 small business loan is expected to be subject to savings of around £4,000 –including the removal of £1,500 arrangement fees and around £2,500 interest – while the biggest savings will go to firms taking out fixed term loans. Entrepreneurs taking out a fixed five-year loan of £250,000 will save £10,000 through the scheme.