RBS Announces That New Loan Fund Will Have “Immediate Effect” On Struggling Businesses

April 16, 2020

Following complaints from smaller businesses in recent days and weeks, RBS has announced that a revamped version of an earlier loan fund will prove to have an “immediate effect” on the ailing firms affected by the COVID-19 lockdown.

The revamping comes after Chancellor Rishi Sunak overhauled the scheme, which had initially promised to lend roughly £330billion of funding to suffering businesses, in early April.

Prior to this, there had been much criticism that banks were taking advantage of the current crisis and financial climate, as well as personal insecurities of the general population and business owners alike.

Small Business Impact

As the vast majority of smaller businesses are shut down and the possibility of another recession looms in the forefront of everyone’s minds, RBS chairman Sir Howard Davies comments that a “sharp increase” in the amount of money lent to small firms is expected.

This comes after RBS revealed a 45x increase in the number of calls and enquiries being received, causing a struggle to deal with the newfound demand.

One of the biggest changes announced by the Treasury is that businesses looking to borrow less than £250,000 will no longer be subjected to having to provide a personal guarantee, which is something that initially put many SMEs off borrowing money in the first place.

Not only this, but another substantial change is that there is no longer any requirement for companies looking to lend money to have first been unsuccessful for a commercial loan elsewhere.

This is good news for those companies that will need a cash-injection over the coming weeks and months; however, it’s worth noting that, as the changes implemented by the Treasury are still relatively new, there is no guarantee on the effectiveness and time-scale on processing loan requests.

As is the case with normal loans, the loans taken out thanks to this scheme will still be subject to uncapped interest rates as disclosed by the bank you choose to lend with, as well as the lender remaining 100% liable for the money taken out.