Royal Bank of Scotland said it had identified thousands of British companies it could offer 1.7 billion pounds of extra credit to, as it responds to government calls for banks to increase lending to small businesses.
Britain's government and central bank are concerned that poor access to finance, particularly for smaller firms, may thwart a sustainable recovery from the country's worst slump in decades.
RBS has come under pressure to increase lending because the government controls 81 percent of the bank after pumping 45.5 billion pounds in to keep it afloat during the 2008 financial crisis.
The bank said it and its subsidiary NatWest had contacted more than 20,000 small and medium-sized enterprises (SMEs) - existing customers - and told them they were eligible to borrow from the 1.7 billion pound credit pot, on top of what they were already borrowing from RBS.
It said the next stage of the programme would see the bank target a further 100,000 SME customers. More than one million SMEs bank with RBS.
Small business lobby group the Forum for Private Business said it welcomed the RBS initiative as long as the bank was evaluating lending opportunities properly.
"Experience tells us to be cautious here, with RBS's qualifying criteria stipulating the offer is only being made to 'credit worthy' businesses. We hope this doesn't mean they're adopting an ultra-hard line approach to risk, otherwise most of the cash available will stay in RBS's coffers," said spokesman Robert Downes.
Mike Cherry, national policy chairman of the Federation of Small Businesses, described the RBS initiative as "a step in the right direction", but reminded SMEs to make sure the terms and overall costs of finance were fair and competitive.
Banks should also offer less established businesses like start-ups the credit they need, he said.
Earlier this year, the government extended its Funding for Lending Scheme, which provides banks with cheap funding to encourage them to lend to households and businesses, but recent data showed business lending has actually fallen versus last year.
Article Source :http://uk.reuters.com
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