Banks Show Support For Small Firms

Fri, 05 Dec 2008

Halifax Bank of Scotland (HBOS) 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 in the process of securing £250 million in funding from the European Investment Bank to lend to its 180,000 small businesses customers at discounted rates.

Merger-partner Lloyds TSB also announced a range of commitments, including a six-point charter that promises any future interest rate cuts in full to its customers with turnover below £1m a year, and 12-month guarantees on overdraft facilities and pricing.

It will also agree to any reasonable request for short term financing and will host business advice seminars around the country.

The banking institutions are under pressure to help business customers as the proposed merger between the two would take advantage of £17bn of government bail-out funding.

Edinburgh-based BOS added it would allow small businesses to benefit "immediately" from any cut in interest rates and, along with Lloyds, will ensure business borrowing rates are linked to the Bank of England base rate and not the more expensive Libor interbank rate .

A helpline service for small businesses is also due for launch early next year.

Last week, Royal Bank of Scotland, which is now majority-owned by the government, promised a range of measures to support its small business clients, which included guaranteeing overdraft rates and contracts for at least a year.
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