Lloyds TSB and HBOS, which are in the process of merging, today both announced plans to help small businesses.
Lloyds is implementing a new six-point charter that includes promising to pass on future interest rate cuts to its customers with turnover below £1m a year. The charter includes promising to support any "viable business" it perceives to be in trouble and not to change the limit or price on overdrafts provided the risk has not changed "materially".
Bank of Scotland, wants £250m of funding from the European Investment Bank (EIB) to allow it to lend to small businesses at discounted rates.
Lloyds is also promising not to change overdraft terms during the term of a company’s agreement, which is usually 12 months, and says it will not change the terms on renewal unless the company’s risk profile has changed.
Both banks committed themselves to keeping the rate of borrowing linked to the Bank of England base rate and not Libor, the rate at which banks lend to each other.
The banks responded to the government’s demands to continue lending to small businesses ahead of the Monetary Policy Committee’s meeting later today to discuss a possible one-point interest rate cut.
© Crimson Business Ltd. 2008