UK businesses will be getting more funding and financial support from both the Treasury and banks. This aims to help them deal with the effects of Brexit, as well as offer them the necessary funds to grow.
RBS Doubles Funding Despite Brexit
The Royal Bank of Scotland has doubled its funding to £6 billion ($7.8 billion), to support small businesses, Reuters reported.
NatWest, which is part of the RBS Group and one of the major retail and commercial banks in the UK, will increase its loan programme, called Growth Fund, in order to respond to pressure by various firms, including those working in the green energy and technology industries. The reasons behind the move were initially driven by Brexit worries, but these are not the only ones Natwest said.
NatWest had already topped up the fund from £1 billion to £3 billion in October in order to offer support to almost 2,000 businesses that could possibly have problems regarding payments or supply due to Brexit.
Talking to Reuters, Mike Slevin, head of capital management at NatWest, said: “It’s really about demand from growth sectors in the UK economy. Obviously it remains fully available for companies that require extra support for Brexit-related purposes as well.”
According to Reuters: “Banks have been keen to promote their small business lending credentials ahead of Brexit, but groups representing small firms have expressed scepticism. Rival lender Barclays announced a 14 billion pound fund over three years to help small firms manage uncertainty including Brexit last month. However, Barclays’ fund included all projected lending to small companies over a three-year period, rather than just extra cash over day-to-day funding.”
Mike Cherry, chair of the Federation of Small Businesses, said: “While it’s good to see some of the banks looking to proactively support customers during this period of uncertainty, the fact remains that lending to smaller firms continues to lag behind big corporations to the tune of millions each year.”
Government Funding for businesses
Last week, the UK government announced that it will be supporting companies based in the UK with an extra £200 million to help them grow, as a result of concerns over slashing EU funding after Brexit.
The Exchequer Secretary Robert Jenrick has said that the funds will be available through the British Business Bank which works with financial institutions to support small businesses in the UK and help them seek the best finance suited for their needs.
Jenrick said: “The UK is creating more start-ups and attracting more venture capital funding than any other European country, but we want to do more to ensure our small businesses and entrepreneurs can thrive. That’s why we are injecting a further £200m into the British Business Bank, specifically to back businesses that are starting out and scaling up.”
British Business Bank chief executive Keith Morgan welcomed the news and explained that “this allocation of £200m is now available to increase provision of much-needed scale-up capital for innovative businesses across the UK. We look forward to putting the funding to good use through our delivery partners to enable such businesses to get the funding they need to grow and prosper.”
The funding comes after the Treasury was criticised by three senior bankers for failing to address the requests from banks to offer support to small and medium-sized enterprises in the case of a no-deal Brexit. The Treasury had explained that such funding was usually offered to businesses in the science and technology sectors. However, as the relationship with the EU is going to change, the government will make sure that companies have the necessary finance to grow their businesses.
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