Bank rate 'deals' save firms £666k
SCORES of small businesses are taking advantage of a lending scheme to increase the availability of funds.
The Bank of England will reveal next week how much has been borrowed under the Funding for Lending Scheme (FLS) from October to the end of December.
But banks in Staffordshire have indicated millions of pounds have already been made available to businesses since the scheme started in August.
It comes as several UK home builders this week reported large increases in profits, with many claiming the market has been helped by programmes such as FLS.
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RBS and NatWest says it has helped 222 small and medium-sized enterprises (SMEs) in North Staffordshire benefit from more than £28 million since August last year.
It claims these companies have saved £666,000 through rate discounts and the scrapping of fees on loans.
Gary Trueman, regional director for RBS in the Midlands, said: "Where there is an opportunity to lend we have proved we will try harder than any other bank to support growth."
FLS allows banks and building societies to borrow from the Bank of England for up to four years.
As security, banks will provide assets, such as business or mortgage loans, to the Bank of England.
The more they lend, the more they can borrow from the Bank of England. Banks that are increasing their lending will pay the lowest fee on their borrowing.
RBS and NatWest says it is on target to make £2.5 billion in loans available to UK SMEs through FLS by the end of February.
Gary added: "We have two key areas of focus this year, around strengthening the relationships we hold with our customers and looking at what we can do to build confidence among SMEs."
Barclays said the number of inquiries about funding has increased in Staffordshire. FLS is also offered by the Co-operative and Leek United Building Society.
Caroline Stanworth, head of corporate banking for Barclays in Staffordshire, said: "The cost of borrowing for UK SMEs has reached very low levels. SME borrowing is at its cheapest since 1987, and the combination of Funding for Lending and low base rates is also pushing down the cost of borrowing for personal loans and mortgages with super-low rates."
She added: "It's still relatively early days for FLS but early indications for 2013 across Staffordshire suggest its positive impact upon lending will continue to increase."
Persimmon, Bovis and Redrow have all posted a rise in pre-tax profits this week.
Chairman of Persimmon, Nicholas Wrigley, said: "Mortgage availability remains the key constraint to the housing market.
"However, there are some signs lenders are embracing the Government's Funding for Lending scheme and we have seen recent reductions in mortgage rates."