Bank announces support package for small firms

Dec 4 2008 by Peter McCusker, The Journal

HALIFAX Bank of Scotland has become the latest bank to announce a support package to help its small business customers through the economic turmoil.

The group’s Bank of Scotland business banking arm said it was securing £250m in funding to support lending at discounted rates to its 180,000 small business customers. It joined merger-partner Lloyds TSB yesterday in also announcing a range of commitments, including 12-month guarantees on overdraft facilities and pricing.

Lloyds outlined a six-point “charter”, with a pledge to pass on in full any further reductions in base rate.

The banks are under pressure to help customers as they are being bailed out under the Government’s part-nationalisation rescue scheme.

Royal Bank of Scotland, which is now majority-owned by the Government, has already promised measures to support its small business customers and earlier this week said it would wait for at least six months before starting repossession action for its struggling consumer borrowers.

Bank of Scotland (BOS) said it would offer lending at up to 0.8% off standard rates with help from the £250m funding being sought from the European Investment Bank (EIB).

The EIB, which is making billions of pounds available in capital for small businesses in the European Union, is currently thrashing out the final terms and conditions of the funding, according to BOS.

Edinburgh-based BOS added it would allow small businesses to benefit “immediately” from any cut in interest rates and will ensure overdraft rates are linked to base rate and not the more expensive Libor interbank rate.

It is also stepping up its advice service for small businesses and a helpline is due for launch early next year.