The Royal Bank of Scotland announced today that it will try to increase the amount of lending to small businesses in the UK by 15%. The next three months is the goal set for RBS to try and up their lending and the reason for this is to stave off criticism that they are doing nothing to support the current economic climate.
RBS CEO Stephen Hester mentioned in an interview with the Daily Telegraph “No use pretending RBS is out of the woods yet — we’re not.
“But the actions we have taken mean we are well placed to play our part in the economic recovery, as people rightly expect us to,”
The Government has been putting pressure on the banks to lend a little more freely, especially with the introduction of Project Merlin which was to help SME’s gain funding through business loans from the UK banks. They can either agree to increase lending or face some hefty fines as punishment.
“When businesses see uncertainty playing out on a global scale, they rightly feel nervous about their own prospects. This makes them less likely to borrow in order to expand, thus further undermining recovery,” Hester said.
Obviously there are other funding options available when it comes to trying to raise some cash for your business. Unfortunately, unlike the USA, the majority of UK businesses still don’t know much about it, or are curious about how to go about it.
The other solutions include asset based funding and invoice financing which are pretty much a similar product. Using funds tied up in invoices companies send out to clients, Factoring lenders will take those invoices and lend you up to 85% of the invoice total within 24 hours. The invoices are then paid by clients and companies receive the rest of the invoice total minus a small fee. Its quick, its efficient and its easy, no more waiting for your bank manager to agree a loan.