In delivering peace of mind on both borrowing and pricing to this vital sector of the UK economy, the Bank has also pledged to continue to provide committed overdrafts to businesses. What this means is that, unlike other providers, our overdrafts are not repayable on demand and so our customers' facilities stay firmly in place for 12 months from the date they are agreed.
For business customers, their committed overdraft pricing will also be guaranteed for 12 months from the day it is agreed and at renewal time, NatWest and RBS promise not to increase it unless there has been a rise in the risks associated with lending to them. This price promise will stay in place until at least the end of next year.
Welcoming the announcement, Stephen Alambritis, Head of Public Affairs for the Federation of Small Businesses, commented: "This is a very welcome initiative from NatWest and RBS. Small businesses are concerned about the availability and pricing of their overdrafts and we are pleased that the Bank has listened to its customers and taken this action to support them."
As well as more financial support, the Bank has also announced more access to face to face advice and support to help businesses trade successfully in an economic downturn. For those businesses facing heightened financial pressures, the Bank is currently putting in place an experienced team of 500 to offer more intensive support to these customers.
Drawn from our existing network of 4,000 relationship managers across Britain, highly experienced managers have been selected for their skills and knowledge which they have built up supporting businesses during difficult times in the past. They are locally based to give our customers the hands on support they need in this current downturn and already, the Bank has started pairing up these managers with those businesses facing increased financial pressures to help guide them through these challenging times.
Phil Orford, Chief Executive of the Forum of Private Business, said: "This commitment from RBS must be welcomed by us, by all political parties, but, most of all, by many hundreds of thousands of small businesses, which have now been given short and medium term certainty about their borrowing arrangements. This is just the sort of action we have all been calling for and it should be applauded."
As well as these commitments, the vast majority (95 per cent) of NatWest and RBS small business lending is base rate linked so all these businesses will benefit immediately from any cut in interest rates. This is precisely what happened when the Bank of England cut its Base rate by 1.5 per cent on Thursday 6th November.
Announcing these commitments, Peter Ibbetson, Chairman of Small Business for RBS, said: "The Bank fully recognises that one of the biggest worries facing small businesses is the increase in the cost of borrowing and we believe this move will reassure our customers that the Bank is committed to supporting them.
"For customers of Business Banking, we are also making it absolutely clear that our committed overdraft will stay in place for an agreed 12 month period provided the business operates within its terms. With over a quarter of the country's small businesses banking with us, we believe we are well-placed to genuinely understand the challenges they currently face and hope that these pledges will enable them to focus on running their business."
