Four UK high street banks have signed up to a £20bn small business lending scheme.
Barclays, Royal Bank of Scotland, Lloyds and Santander have all joined the government-run National Loan Guarantee Scheme (NLGS) which aims to offer more financial support to businesses over the next two years.
The only major high street bank not to sign up for the scheme is HSBC which said that “while it supports the aims of the government’s credit easing programme, it was unable to participate on commercially viable terms”.
Companies with a turnover of under £50m are eligible to apply to the scheme.
Under the NLGS, the government will guarantee £20bn of the banks’ own borrowing, allowing them to borrow more cheaply than normal. This cheaper funding is then passed onto small businesses in the form of lower interest rates.
Around £5bn of government-guaranteed borrowing will be made available in the first tranche of the scheme.
Chancellor George Osbourne said the NLGS delivered on the government’s promise to help small businesses gain access to lower interest rates.
Federation of Small Businesses chairman John Walker welcomed the scheme but called for clear communication to those who need it. “What we now need to see is clear communication to small firms and bank branch staff so that everyone is aware of it, and how it will work, so that businesses can benefit from it,” he said.