Mid size manufacturers targetted to boost lending

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Mid size manufacturers targetted to boost lending

RBS announced today that it will use the Bank of England's Funding for Lending scheme to offer UK manufacturers cheaper funds to boost growth.

For the first time, RBS’s Manufacturing fund will be targeted specifically at mid-sized businesses (MSB's). These firms typically have a turnover of £25m to £500m and are seen as a key source of future growth, often referred to as "gazelles". The CBI has said if more could reach their potential, it could add £20bn-£50bn to annual gross domestic product growth. Mid-sized businesses represent upwards of 30 per cent of the UK’s manufacturing base.

"Mid-sized manufacturers are key in helping the UK grow and export out of recession. Through Funding for Lending, these are the most competitive terms that we have been able to offer manufacturers for several years. We hope it will be a catalyst for investment."

Peter Russell, Head of Manufacturing, RBS

The RBS fund will offer UK manufacturers fixed and variable rate loans of between £250,000 and £25 million with interest rates and arrangement fees for each new tranche of lending. Manufacturers will also benefit from being able to defer any capital repayments for two years.

Manufacturers will be able to access loans over three and five-year periods. The fixed rates are 2.75% and 3.2% respectively (down from previous rate of 3.45% and 4.25%). For the first time, and directly linked to the Funding for Lending scheme, manufacturers will also be able to access variable rate loans in the fund, with a published interest rate margin of 2% for 3-years and for longer loans 2.25% plus three month LIBOR. All loan options carry an arrangement fee of 0.5% flat - another discount as these typically exceed 1 per cent.

The RBS Manufacturing Fund was launched in January 2010. Those manufacturers with turnover below £25million can benefit from RBS NatWest's SME Funding for Lending offering, which has cut interest rates on £2.5bn of SME loans by an average one percentage point and was launched 1st August 2012.

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